Web Only / Features » October 1, 2015
Even Donald Trump Wants To Eliminate This Tax Loophole for the Rich, Yet Congress Won’t Do It
While dodging through this loophole, hedge fund staffers pay about half the tax rate that kindergarten teachers are assessed.
The inequality that is presently ripping our society apart is not the result of some incomprehensible force of nature, but the direct result of collusion between financial and political elites to rig the system for the enrichment of the few—i.e., themselves—and the impoverishment of the many.
With the 2016 presidential campaigns in full swing the burdens of the working middle class have taken center stage. And believe it or not, there is bipartisan support from the front-runners on a key issue brought up over and over again. Donnie Trump is for it. Hillary Clinton is for it. Jeb Bush is for it. Bernie Sanders is for it. Even Barack Obama is for it. And the American people are overwhelmingly for it.
The “it” that's drawing such broad support is the idea of ending a ridiculous tax loophole that was written by and for the richest, most pampered elites on Wall Street. An obscurely titled “carried interest” tax break allows billionaire hedge-fund hucksters to have their massive incomes taxed at a much lower rate than the one retail workers, Main Street businesses, carpenters and other modest-income people must pay.
Keep that carried interest tax loophole in mind when I tell you this number: 158,000. That's the number of kindergarten teachers in America. Their combined income in 2013 was $8 billion. Here's another number for you: 25. That's the number of America's highest-paid hedge fund operators whose combined income in 2013 was $21 billion. Yes, just 25 Wall Street greedmeisters hauled off $13 billion more in pay than was received by all of our kindergarten teachers—the people we count on to launch the educations of the next generation.
Which group do you think is rewarded by law with the lowest rate of income tax? Right: the uber-rich Wall Streeters. Incredibly, Congress (in its inscrutable wisdom) gives preferential tax treatment to the narcissistic money manipulators who do practically nothing for the common good. Even flamboyant celebrity narcissist Donnie Trump sees through the gross inequality of this tax scam: “The hedge fund guys didn't build this country,” The Donald recently barked. “These are guys that shift paper around, and they get lucky. The hedge fund guys are getting away with murder.” Indeed, while dodging through this loophole, they pay about half the tax rate that kindergarten teachers are assessed. In effect, Wall Street's puppets in Congress let this tiny group of moneyed elites steal about $18 billion a year that they owe to the public treasury to finance the structure and workings of America itself.
This privileged treatment of pampered paper and money shufflers over people who do constructive work in our society adds to America's widening chasm of inequality. It's so unfair and unpopular that even Donald, Hillary, Jeb, Bernie and others are saying that it has to go. So it's bye-bye, loophole, right?
Ha—just kidding! Trump can mouth all he wants, but no animal hath such fury as a hedge-funder whose special tax boondoggle is threatened. Trump had barely gotten the word “unfair” out of his puffy lips before the tax-loophole profiteers deployed battalions of lobbyists, PR flacks, and front-group operatives out to defend their precious carried-interest provision. One group, with the arcane name of Private Equity Growth Capital Council, rushed a dozen Gucci-clad lobbyists to Capitol Hill to “inform” lawmakers about the virtues of coddling Wall Street elites with tax favors.
Of course, “informing” meant flashing their checkbooks at key members of Congress. After all, even the loudest blast of political talk is cheap—and it's the silent sound of a pen writing out a campaign check that makes Washington World keep spinning in favor of the rich.
Sure enough, Rep. Paul Ryan and Sen. Orrin Hatch, the two lawmakers who head Congress' tax-writing committees, quickly announced that—the will of the people aside—there would be no repeal of the hedge-fund loophole anytime soon. The inequality that is presently ripping our society apart is not the result of some incomprehensible force of nature, but the direct result of collusion between financial and political elites to rig the system for the enrichment of the few—i.e., themselves—and the impoverishment of the many. There's a word for those elites: thieves.
Jim Hightower is the author of six books, including Thieves in High Places (Viking 2003). A well-known populist and former Texas Commissioner of Agriculture, he currently writes a nationally-syndicated column carried by 75 publications. He also writes a monthly newsletter titled The Hightower Lowdown, and contributes to the Progressive Populist.
if you like this, check out:
- Keith Ellison: The Time Has Come for Medicare-for-All and a Maximum Wage
- Kentucky Teachers Are Protesting and Walking Off the Job to Save Their Pensions—And Winning
- The Democratic Establishment Should Be Very Nervous After Chicago’s Primary Results
- Bernie Sanders’ Inequality Town Hall Proved How Far Left the Economic Debate Has Moved
- How a Scrappy Campus Union Saved Tennessee From Privatization