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Weathy corporate dealers keep tax loophole

Oct 9

Written by: Jim Hansen
Tuesday, October 09, 2007

A group of super wealthy corporate dealers have avoided paying taxes on most of their earnings for years because of an obscene loophole in the law. That loophole lets them get away with calling the income they make on their corporate buyout deals "capital gains" rather than "income." The highest possible income tax rate is 35% but the capital gains rate is only 15%.

When some members of Congress finally figured out that this so-called "carried-interest" loophole was costing Americans $6 billion a year, they introduced bills to repeal it. In response, these private equity managers have used some of their wealth to pay for a massive lobbying effort. In fact, their lobbying has generated business for more than 20 big lobbying firms, many that include former members of Congress. One firm alone has been paid $3.74 million this year.

Of course, these firms and their clients also give generous campaign contributions to members of Congress.

In a Washington Post story today, it appears that the Senate is content to let another year go by without closing this loophole. President Bush is pleased.

On the one hand, Congress is reluctant to end the hemorrhage of money going to pay for an endless occupation in Iraq. $450 billion so far. Investments in our schools, our health care, our bridges have to wait.

On the other hand, Congress sees no problem in letting a group of super-rich corporate dealers off the hook from paying their fair share of this war. With the money they get to keep, they can buy all the schools, health care and private bridges they want. And have a lot left over to give generously to fund congressional campaigns.

The traditional media is also asleep on this. Sex not taxes is what titillates people.

In the relative silence, senators in both parties have found it relatively easy to side with wealthy power brokers over ordinary worker. Senators Harry Reid, Larry Craig, Max Baucus, Mike Crapo (and the list goes on) are all happy to just ignore the issue. It is offensive to basic American values of fairness and - particularly now - of shared sacrifice during war; regardless of how one views the immorality of this war - until it is ended, everyone should agree that the sacrifice - and the tax burden - must be shared.

Citizens for Tax Justice is one of many watch dog groups tracking this problem. The Center for Responsive Politics also does a good job following the money trail of campaign financing.

Don't just get mad, pick up the phone and call Sen. Crapo (208-334-1776) and Sen. Craig (208-342-7985) and tell them whether you think their idea of "income" upholds basic American values of fairness and shared sacrifice.

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Re: Weathy corporate dealers keep tax loophole

The Fair Election Now Act in the Federal Government can fix this.

In Idaho, the people can fix it in the 2008 legislature.

Can you help me find persons in Districts 3, 7, 11, 12, 27, 31, 33 who will ask their Senator to insist on a hearing of the revised Fair Elections bill in the 2008 legislature and vote to send the bill to the Senate floor with a do-pass?

The letter could look like this:

Example letter, email, or telephone conversation to Senator Davis. You can use this letter for Senators Stegner, Davis, Little, Geddes, McKenzie, Jorgenson, and Darrington.

Honorable Senator Davis:

I ask that you do all you can to assure that the Idaho Fair Elections bill gets a hearing in the State Affairs Committee. Then vote to send this bill to the Senate with a do-pass recommendation.

I am aware of the February 2 hearing of S1037. Kate Kelly has revised S1037 to better show that the bill’s intention is to allow each Idaho election to better reflect the wishes of its constituency.

Fair Elections allows candidates, who do not wish to accept money from corporations, PACs, or lobbyists, to run for office. This gives voters the opportunity to vote for a candidate, who may better represent the voters.

The Fair Elections Now bill is in the federal government, sponsored by Richard Durban and Arlen Specter in the Senate. John Larson will soon introduce a similar bill in the House. More than 60 million people - including the AFL-CIO, the NAACP, the League of Women Voters, the Dolores Huerta Foundation, the National Council of Churches and others - have announced their support of this legislation. This shows the nationwide number of people who want Fair Elections. In Maine, 81 percent of all candidates for state office ran public campaigns in 2006. Other programs are in Arizona, North Carolina, Connecticut, New Jersey, New Mexico, Vermont, Albuquerque, New Mexico, and Portland, Oregon.

This is what critics and supporters of Fair Elections say:

• Critics say that candidates do not spend a lot of time getting money from corporations, PACs, and lobbyists.

• Supporters say that the time legislators do spend raising money is better spent communicating with their constituents.

• Critics say that the award of matching funds to publicly financed candidates chills the free-speech rights of groups that make independent expenditures and also coerce candidates into running with public funding.

• Supporters say that free speech in the current system may be affected by those who give candidates money, whether candidates realize it or not. Supporter’s perception is that funding sources may affect how a legislator votes. Supporters say that matching funds provide a level playing field, so that candidates can respond to attacks and ads made by independent groups.

• Critics say that the people should not pay for candidates' election.

• Supporters say that the people now pay for candidates’ election. Their perception is that they do not have representation in the current system, even though they pay for it by buying products and services from those companies that do give money to candidates.

• Critics say that Fair Elections is unconstitutional because it compels some citizens to pay for the speeches of candidates, whom they oppose.

• Supporters say that the law provides public funding that allows ordinary people to run for office and get their message out without becoming politically dependent on big campaign contributors. Supporters’ perception is that in government now, only the rich can decide what happens. Fair Elections is about taking special interest money out of the campaign, returning power to the people, having candidates participate in debates, and adding substance to issues, rather than just using slick advertisements.

Good Laws Caused by Fair Elections Are Evident in Maine

In 2000, the Maine Legislature approved a pharmaceutical program that gives families the chance to buy drugs at a discount. The law was upheld by the Supreme Court and went into effect in January 2004.

In 2003, the legislature approved a health reform bill, known as the Dirigo Health Act, which provides health insurance to all Maine residents. Its primary features include controls on health care costs and initiatives to encourage high-quality care. It also subsidizes premiums for those who cannot afford to pay. Public funded legislators were free to support this legislation without any concern for the big-money special interests that might oppose such a law.

If I believed that the system we have now was working, I would not be asking you to pass the Idaho Fair Elections bill. When did you last talk with me about Fair Elections or any other issue?

If you want to learn more about those of us who want Fair Elections, please get in touch. Please get in touch with me before the hearing and tell me what you will do about Fair Elections and why you will do it.

The Senator are:

Senator Robert L. Geddes , Republican
District 31, Soda Springs
370 Mountain View Ave., Soda Springs, 83276
Home (208) 547-2423
FAX (208) 334-2320
Environmental Engineer

Senator Denton Darrington , Republican
District 27, Declo
302 S. Hwy. 77, Declo, 83323
Home (208) 654-2712
Farmer/Teacher

Senator Bart M. Davis , Republican
District 33, Idaho Falls
2638 S Bellin Circle, Idaho Falls, 83402
Home (208) 529-4993
Bus (208) 522-8100
FAX (208) 522-1334
Attorney

Senator Joe Stegner , Republican
District 7, Lewiston
216 Prospect Blvd., Lewiston, 83501
Home (208) 743-3032
FAX (208) 743-3032
Retired Grain Dealer

Senator Brad Little , Republican
District 11, Emmett
P.O. Box 488, Emmett, 83617-0488
Home (208) 365-6566
Bus (208) 365-4611
FAX (208) 365-4615
Rancher

Senator Michael Jorgenson , Republican
District 3, Hayden Lake
2953 Point Hayden Dr, Hayden Lake, 83835
Home (208) 762-5514
Bus (208) 762-7784
FAX (208) 762-1485
Consultant

Senator Curt McKenzie , Republican
District 12, Boise
McKenzie Law Offices, PLLC, 1004 W Fort St, Boise, 83702
Home (208) 468-1027
Bus (208)344-4379
FAX (208) 947-0014
Attorney

By Calvin Leman on Thursday, December 20, 2007

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