Private- Equity Tax Hike Falters
…
In response, private-equity firms — whose multibillion-dollar deals have created a class of superwealthy investors and taken some of America’s large corporations private — hired dozens of lobbyists, stepped up campaign contributions and lined up business allies to wage an unusually conspicuous lobbying blitz.
…
Several prominent lawmakers expressed surprise to find that the managers’ profits, known as carried interest, were taxed as capital gains, for which the rate is usually 15 percent. That is less than half the 35 percent top rate paid on regular income.
Yet another corporate welfare loophole that allows private equity to avoid paying the taxes they owe. What a surprise that the political leaders decide to tax the future generation instead of those paying them huge sums of money today (ok, it is sadly not a surprise that money buys favors in Washington DC). One option to cut the debt passed on to future generations is to cut spending but since spending has exploded over the last 7 years the decision to force our grandchildren to pay instead of paying for it ourselves is something the “leaders” of our country should be ashamed of.
Federal spending in billions – source: fedspending.org
| year |
|
$billion spent |
|---|---|---|
| 2000 | $1,813 | |
| 2001 | $2,027 | |
| 2002 | $2,284 | |
| 2003 | $2,524 | |
| 2004 | $2,517 | |
| 2005 | $2,603 | |
| 2006 | $2,869* |
* $2,152 actual spending for 3 quarters which is a rate of $2,869 for a full year. 2007 data not yet available.
Comments
7 Comments so far
Largely what they did was take huge amounts for taking positions that risk the economy for personal gain. The investments have huge leverage and massive negative externalities to the economy. Any capitalist would know this is exactly what the government is suppose to protect the economy from…
[...] certainly not support consolidation past the point of many competing companies), but the idea that those with the gold make the rules. Natural monopolies (like gas distribution, electricity, likely internet infrastructure…) should [...]
The continued attempts by politicians to distract from the huge taxes they are voting to place on our children and grandchildren is disheartening. And the continued actions that are the equivilent of getting another credit card…
[...] I am sure changes will be made for awhile and then people will forget and special interests will pay politicians to get special favors and we will find ourselves in a different but similar mess a few decades from [...]
[...] we can hope is that there is some limit on how egregious the favors politicians grant those paying them money are. Maybe this latest escapade (and the costs of those favors to bankers) will cause a reduction [...]
[...] I think IRAs and 401(k)s are a good public policy mechanism to encourage retirement savings. But you can’t let special interest groups just abuse the system with senseless claims. You can make more sensible arguments for the same policy but I can’t think of any argument that is even remotely close to reasonable. This is just lobbyist trying to get rich clients a way to delay paying taxes. Not a new tactic but not one we should support: Lobbyists Keep Tax Off Billion Dollar Private Equities Deals and On For Our Grandchildren. [...]
“Senator Paul Wellstone, Democrat of Minnesota, said that Congress had ’seemed determined to unlearn the lessons from our past mistakes.’”