Weren't "good" economies the reason for lowering taxes inthe past? So if the economy is "bad" now, shouldn't we raise them?
As the March 1st deadline approaches for a budget sequester, a new PewResearch survey finds that the majority of Americans don't want spending cuts, butinstead, want to increase spending or maintain it at current levels.
Mitt Romney earns most of his money with "carried interest" (averagingabout $20 million a year), but accordingto Roll Call, there's a rumor that some Republican lobbyists might agree toclose the carried interest tax loophole in anticipation of the sequester.
In one year alone MittRomney had reported paying as little as 13.9 percent in capitalgainson $21.7 million he earned as carried interest. Will he soon have to start payingthe top marginal rate of 39.9 percent?
The "carried interest" loophole allows investors, whose personal income is generated mainly from"investments" (aka unearned income, such as stocks, bonds,annuities, vested stock options, real estate, rental income, dividends, silver,wine, art, gold, etc.), to pay taxes according to the capitalgains tax rate of 20%, which is significantly lower than the top marginalrate of 39.9% on earned income (such as regular hourly wages or managerialsalaries).
Some anonymous Republicans are only just now finally admitting that, by eliminatingthis loophole, itsimpact on the economy would only be "minimal", and they would considerchanging the tax code --- but not because we need the additional revenue --- butbecause it would "primarily hurt Democratic campaign donors".
Republicans have argued against similar tax increases in the past on thegrounds that it would "discourage work and investment and harm economicgrowth." (Bla, bla, bla...they always have a reason to not taxthe rich)
But closing this loophole wouldn't really be a tax increase, it would just bechanging thedefinition of their source of income, then taxing them accordingly --- carriedinterest would be taxed as regular wages ("unearned income" vs."earned income").
Waiters are taxed on their tips, why aren't multi-millionaires taxed in the same wayon their carried interest? Shouldn't the people with the least get thebetter tax break? I'm mean, it's not the same as if the rich were buying in bulkand expecting a discount.
But the rumor about eliminating the carried interest loophole is most likelyfalse. A spokesman for Senate Minority Leader Mitch McConnell (the Republicanfrom Kentucky) rejected the premise that Senate Republicans would supporteliminating the carried interest loophole. (As we've learned over the past twoyears, his Tea Party supporters would rather we have NO taxes orgovernment at all.)
Michigan Democrat Senator Carl Levin introduced a bill that only mentionscarried interest but suggested it would be a good vehicle for raising additionalrevenue. However, eliminating the loophole is not included in the SenateDemocratic bill to replace this year’s sequester cuts.
Some politicians claim that by taxing carried interest (aka unearnedincome) as normal wages (aka earned income) might not be as simple asit sounds, and there is vigorous disagreement about which "technique"to use for doing so. (As though it takes a rocket scientist to figure this out.Why not just tax Warren Buffett at the same tax rate as his secretary? Simple.What's socomplicated about that?)
Private equity firms (such as Bain Capital), investment banks (such asGoldman Sachs) and hedge funds would be the most affected by eliminatingthe carried interest tax loophole, and argue (as always) that it would have anegative effect on economic growth at a time when the economic recovery remains"weak".
But the economy is only "weak" for the unemployed and the under-paidworkers. The "investor's economy" is doing very well --- recordprofits, record CEO salaries and record bonuses --- remember?
Over the last four years, the stock indexes have over doubled; the Dow JonesIndustrial Average recently hit a 52-week high of 14,058 and is on track tomatch its all-time historical high of 14,164 --- when almost four years ago onMarch 9, 2009 it was down to only 6,547.
Mitt Romney had said as much last year when hesaid the rich were doing "just fine".
Ken Spain, the vice president of public affairs for the Private Equity GrowthCapital Council (a lobbyist for vulture capitalists) said, “Lastyear, private equity firms invested over $140 billion dollars in U.S.-basedcompanies in every state and in every congressional district across the country.A tax hike on business investment would only serve to undermine our economicrecovery and disincentivize the kind of entrepreneurial risk taking to start,save and grow businesses."
Bla, bla, bla...the same ole, same ole excuses and threats, "If you tax us more, we won't try to make more money,and we won't hire more people." BillO'Reilly made a similar threat if Obama raised his taxes, and O'Reilly stillhasn't quit his job.
We've been hearing them whine like this for the past 40 years. When WOULDhave been a good time to eliminate this carried interest tax loophole? Would ithave been back in 2003 when George W. Bush had LOWERED the capitalgains tax rate, when the economy was doing "good"?
The rich NEVER think that ANY time is a "good" timeto raise their taxes, so let's have them make that "shared sacrifice"now, because the rest of us have sacrificed enough already.
* Capitalgains and corporatetaxes need major reform. They call it "unearned income", so even theyadmit that their money isn't earned! Too Much Online | Inequality and Excess
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