A disturbing story in The Washington Post yesterday suggested that Congress is losing its cojones when it comes to closing some of the most obscene tax loopholes benefiting the richest of the rich–hedge funders and private equity managers.
According to The Post, proposals to increase tax rates on private equity partnerships like Blackstone from a 15 percent capital gains rate to a 35 percent corporate rate led to "private-equity funds dispens[ing] at least $5.5 million for lobbying assistance" in the first six months of this year.
That kind of pay-to-play politics may be one reason the Senate seems to be balking at raising the tax rates on the profit paid to fund managers–called "carried interest"–which as the New York Times pointed out is a "euphemism for the hefty performance fees that fund managers haul in." That particular loophole allows managers to pay lower tax rates on their income than the average American worker, as I posted previously. The Senate is also considering limiting the rate increase only to private partnerships that trade publicly as corporations–even though most of the private equity and hedge fund firms are private. And those publicly traded firms would be allowed a 5-year grace period before seeing the increased rate–this at a time when the war is draining our nation’s treasury to the tune of $12 billion per month and a serious public investment agenda is desperately needed.
We already know where Republicans stand when it comes to protecting Big Business at the expense of helping ordinary Americans. But if the Democrats can’t move on this very basic issue of tax fairness then they will have failed this critical litmus test: does the party stand for working people or doesn’t it?