Congress for sale

From Kevin Drum:

There are all sorts of arguments in favor of low taxes. Supply
siders say that high marginal income tax rates reduce people's
incentive to work. Liberals complain that payroll taxes are regressive.
Capital gains taxes inhibit investment. Taxes on dividends are double
taxation. Cigarette taxes punish the poor. Etc.

But allowing management fees for hedge funds to be taxed at capital
gains rates (15%) instead of the normal income tax rate (35%)? That's a no-brainer.
All the fast talk in the world can't produce even a colorable argument
in favor of letting this insane loophole continue, and no one but the
hackiest of Grover Norquist's tax jihad hacks should be willing to
defend it.

Alas, no, even Democrats are very much for sale to the ultra-high bidders who manage the hedge funds.  From yesterday's Post:

Senate Majority Leader Harry M. Reid (D-Nev.)
has told private-equity firms in recent weeks that a tax-hike proposal
they have spent millions of dollars to defeat will not get through the
Senate this year, according to executives and lobbyists…

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. Their argument was that higher
taxes would run counter to accepted tax policy and slow economic growth…

In one meeting with industry representatives last month, Reid said the
private-equity tax plan would not be considered in the Senate this
year, according to a participant. Rather than citing the lobbying push,
Reid implied that the reason had to do with the lack of time on the
jammed Senate schedule.

So, I suppose millions of dollars on an aggressive lobbying campaign is just a coincidence.  The truth is, when it is issues that fly well below the public radar– e.g., outrageous tax benefits for hedge fund managers, your Congress is for sale.


About Steve Greene
Professor of Political Science at NC State

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