Feb 25, 2013
How do we battle our nation’s skyrocketing income inequality? We need to go after capital gains and dividends.
CWA President Larry Cohen explains that if he could close one loophole in the sequester showdown, it would be to end the carried-interest loophole that taxes wealthy hedge-fund managers’ incomes at the lower capital-gains rate.
“People who make hundreds of millions of dollars a year pay taxes at a lower rate than somebody who’s cleaning floors and makes $20,000 a year,” he said on The Ed Schultz Show.
“That’s the Romney tax,” responded Schultz. “That’s the Romney income plan. That of course is what the Republican Party is protecting. They won’t give it up. They simply will not give that up.”
A new study from the non-partisan Congressional Research Service illustrates exactly why closing this loophole is so critical. It found that the explosive growth in income from capital gains and dividends has been the biggest driver of income inequality over the past 15 years.
The Washington Post’s Greg Sargent analyzes how this “badly undermines” the GOP position on the looming sequestration cuts:
In other words, wealthy beneficiaries of low tax rates on capital gains and dividends are doing extremely well — and their runaway wealth is a major driver of income inequality. There’s a lot of that money out there that could be taxed as ordinary income — as Obama and Dems want — as a way to avert the sequester, which could badly damage the economy. Republicans oppose this.
… Republicans are openly conceding the sequester will damage our national security, even as they refuse to avert it by agreeing to the closing of loopholes benefiting the wealthy — even though this would likely be part of a deal in which they got more in spending cuts than they’d be conceding in new revenues! As the new study shows, those benefiting from GOP opposition to any new revenues are doing extremely well indeed — lending more ammo to the Democratic argument that Republicans would sooner damage our military and economy than ask for a penny in new revenues from the very rich.
The sequester kicks in on Friday, unless Congress passes an alternative plan to the automatic, across-the-board spending cuts.
“It is going to take, over the week ahead, mobilization by of all of us working Americans, whether we’re union or not, to say, you know, ‘We’re fed up with this!’” said Cohen.
Listen to the full interview here: