Monday, October 15, 2007

The "haves" and the tax code.

If you are imagining that the Democrats are the party of the "ordinary guy," then you are going to have trouble explaining why the Democrats want to protect an important and sizable dent in our progressive tax system.

Opinion (A US News editorial, posted on Yahoo)
Our view on tax equity: Democrats balk at easy way to narrow the wealth gap
Mon Oct 15, 12:22 AM ET

...The private equity industry has been on the defensive since earlier this year, when The Blackstone Group, a New York concern that buys and sells companies, went public. Blackstone's initial stock offering highlighted how certain executives can make millions of dollars and pay taxes at a lower rate than do school teachers and police officers.

When members of Congress proposed eliminating that disparity, the industry responded in classic Washington fashion: It upped its political contributions and flooded the capital with lobbyists. According to Bloomberg News, private equity groups have spent $5.5 million in lobbying fees so far this year, almost four times what they spent in 2006.

This campaign has apparently thrown enough sand in the gears of government that any action is unlikely for some time. The Democrats, who control Congress and claim to represent the middle and lower classes, ought to be embarrassed.

IRS figures released Friday show the gap between America's richest and poorest citizens is the widest it's been in a quarter century. In this context, letting super-rich hedge fund managers pay taxes at a rate lower than do average workers invites resentment.

The top income tax rate for most skilled executives is 35%. Middle-class workers usually pay in the 25% or 28% brackets. But a group of wily managers has figured out how to use a concept known as "carried interest" to disguise such income as capital gains and pay just 15%.

Wealthy hedge funds and private equity firms aren't the only businesses to use carried interest. So do small partnerships that develop real estate or drill for oil and gas for example. But there's no persuasive reason for not treating carried interest as ordinary income, subject to the progressive income tax...

Not only should the Democrats be "embarassed," they should be called to the carpet loudly and obnoxiously. If you live in a district represented by a Congressperson with the Democratic Party, you should deluge their email, phone, and fax lines with protests, class. This is class warfare, and if you just sit there and do nothing, the "haves" will continue to profit unfairly at your expense. Why should your taxes be raised to cover shortfalls that would be less or be non-existent if they weren't evading their tax responsibilities?

Or do you just enjoy being exploited by the rich?


דן said...

Fractional Reserve Banking and Halachah ?

I saw your posts about fiat currency. Both the US and Israel have a central bank, The Fed and the Bank of Israel respectively, which create money out of nothing. The banks, in turn, under fractional reserve banking, effectively create money out of nothing (when you deposit 100 shekels, the bank can lend out 96 shekels, then that person deposits 96 shekels into the banking system, of which 96% of 96 shekels can be lended out, etc. all of which expands the money supply to a theoretical limit of 25 times) Since the Bank of Israel is Jewish owned, are there halachic problem with fraud, since the banks can charge interest several times on the same deposit, which inflates the currency, decreasing the value of our savings.

Ahavah B. said...

I also disagree with the practice of "selling" debt to a goy or goy institution to evade the obligation of forgiving debt every schmitta year. The banks in Israel are controlled by the same corrupt international bigwigs that control all the other central banks.

Interestingly, Argentina and Brazil and some other nations have ditched their IMF and World Bank debt and said they will no longer play ball with the corrupt big boys that tried hard to destroy their economies more than once.

I have wondered what would happen if Israel did the same. Thoughts?