By Arthur Piccolo
News Americas, NEW YORK, NY, Fri. July 8, 2011: Look, a chance for President Obama to display real leadership.
Of all the abuses in the U.S. tax code – and there are so, so, so many – the worst in its own way is a provision which allows many of the wealthiest Americans to escape even the semblance of paying their fair share of income taxes.
For those who don’t know about this, it goes under the seemingly benign term “carried interest” a fanciful made up term – like many others that are used to con us – that has no logical meaning but very, very real consequences. What it does is simply buried in the U.S. tax code; it magically turns regular income into the much lower taxed form of income labeled “capital gains.”
The very existence of “capital gains” which is income from invested rather than income from ones labor as a distinct form of income taxed at a much lower rate is another form of abuse against the many to benefit the few.
The “logic,” there is always “logic,” is that if rich people are going to invest their (sic) money rather than store it away and just watch it grow. And so the rest of us must persuade them to do so by making it enticing to invest rather than save by providing them a lower tax rate to do so. If you don’t understand how illogical it is I am not going to waste my time telling you.
So that you who break your backs to make enough income from your labor just to survive must pay a higher rate of income tax than the idle rich. All these heirs and heiresses or as they should be dubbed “Airs” and “Airesses” doing charity work and not receiving any pay check for which they are lionized, are getting their income that keeps them very rich from their inherited invested wealth such as piles of stock daddy left them which is taxed at a much lower rate than if they actually had to work. Make sense to you? Only if you are rich and get whatever you want!
Now let’s get back to rich business executives hedge fund managers and others who qualify to have their mega incomes labeled “carried interest.” What that magically does is hocus pocus turning all that income into the equivalent of “capital gains” even though it is just regular income.
So greed merchants like Steven Schwartzman and John Paulson pulling in hundreds of millions, at times billions, in annual income save tens of millions in some cases hundreds of millions in taxes each year they should be paying but are not. All it takes is this ‘simple’ provision in the tax code.
I am not going to waste my time or insult my readers’ intelligence wasting time providing the rationale Schwartzman and the others employ (sic) to justify this bank robbery. It amounts to gibberish and nonsense except if you have enough power and money and buy enough members of Congress you can turn anything at all into something logical and fair in Washington.
Which finally brings us this week to Barack Obama – the weekly subject of my commentaries. Sorry it took this long to get to you Barack it won’t happen again.
As with just about every issue Obama has always been a “critic” of carried interest as a tax avoidance technique except that like with almost anything else Obama’s position is rhetoric thin. Say anything, do nothing. He talks the talk but does not want to walk the walk. After all it is just these guys who Obama counts on to get him to his billion dollar re-election fund goal and who treated him to $$$$ so well in his last election that won him The White House.
The only difference is now that the whacked out Republicans led by the likes of Cantor and Bachman are trying to pin Obama to the wall so that they not destroy the United States credit worthiness by allowing America to default on its debt obligations.
So Obama has no choice but to hit back or everyone including Democrats will label him a wimp not worth bothering to re-elect.
Since Barack and Michelle’s ultimate nightmare is giving up the very, very, very good and FREE life for nothing but a typically rich pampered life style. They might not even be able to budget for their own Gulfstream jet let alone anything like Air Force One.
So President Obama in response to Cantor and the Right Wing boys and girls in Congress is finally calling their bluff (maybe).
So Republicans want to cut everywhere in order to agree to raise the debt ceiling EXCEPT the rich ……
So how about cutting ABUSE out of the tax code says Obama! At first the Republicans simply tried to ignore President Barack Obama being even bigger Lap Dogs for the rich and powerful then they realized the majority of Americans so often asleep while they get robbed by our government just might “rebel” a term Republicans normally love except when Americans might “rebel” against them for screwing middle class and poor Americans while leaving alone all the goodies the rich enjoy while vacationing on Nantucket getting there on their tax advantaged corporate jets as the Wall Street Journal recently noted.
As a result Obama who now sees votes in standing up for something is very publicly raising issues of blatant UNFAIRNESS like carried interest, like tax breaks for lush corporate jets, tax breaks for the super rich oil companies, ridiculous subsidies for corn ethanol, etc., etc, etc. ad infinitum.
What will be the outcome in the coming weeks with the looming debt crisis. As of my deadline for this Commentary no one knows. As usual Obama may back down as he always does in the name of compromise and civility (go ahead laugh that is why I wrote that laugh line) OR it is possible the Republicans as much as they hate to take away anything from the rich and the powerful their Masters may decide this time they have no choice or they just might suffer an election blood bath or jihad if you prefer next year, and worst of all give Obama a second term without breaking a sweat.
Of course they may also realize that so what if they take away some of the giveaways to the rich and powerful now. They know as is always the case they will find all kinds of ways to put them back in sooner rather than later.
Obama won’t stand in their way because having proven he stood up to the rich once he can go back to pandering to them after the debt crisis is temporarily plugged and he gets himself all those Big Checks so he meets his Billion Dollar campaign fund raising goals.
And everyone lives happily ever after, except the rest of us.
Arthur Piccolo is a professional writer and commentator and often writes about Latin America for New Americas.