Trumped

2 comments December 14th, 2007at 09:28pm Posted by Eli

David Sirota indirectly hits on one of the most frustrating things about being a progressive:

Congress, you may have noticed, is trying to prevent the Alternative Minimum Tax (AMT) from hitting the middle class. This tax was originally designed to prevent billionaires like Kravis from using creative accounting to avoid paying any taxes whatsoever. However, the AMT did not adjust for inflation, and so the tax now threatens to hammer millions of ordinary Americans.To prevent this unintended consequence without adding to the national debt, Congress has to find about $50 billion. That is roughly the amount stolen each year through a tax loophole allowing those like Kravis to pay a lower effective tax rate than the servants who tend to his 26-room Park Avenue penthouse. Instead of paying the 35 percent income tax rate, private equity managers are permitted to pay the 15 percent capital gains rate on most of their earnings. They are also allowed to use offshore corporations to shelter their income from taxes.

In November, House Democrats passed a bill to prevent the AMT from hitting the middle class. The legislation included language shutting down the Henry Kravis Loophole. William Stanfill, a Colorado venture capitalist who testified to Congress in support of that provision, correctly says there are no negative side effects to “taxing rich white guys the same as the rest of the population.”

However, when the bill hit the Senate, the Washington Post reported that “a sprawling, big-money lobbying campaign” stopped it cold.

In the first nine months of 2007, the private equity industry spent about $20 million on campaign donations and lobbying. That kind of cash is barely a fraction of what just one executive like Kravis saves each year thanks to the tax loophole. But it was more than enough to convince a bipartisan group of senators to block the loophole-closing bill, thus creating today’s hostage situation.

How many times have tens or hundreds of thousands of progressives across the country bombarded Congress or key congresscritters with petitions, phone calls, e-mails and letters, only to have almost no effect at all? But a very small segment of very wealthy individuals and companies can throw truckloads of cash at Congress and stop legislation they don’t like dead in its tracks (see also: telecom immunity).

How is this democratic?

Entry Filed under: Corruption/Cronyism,Politics

2 Comments

  • 1. Charles  |  December 14th, 2007 at 10:52 pm

    It’s shareholder democracy: one dollar, one vote.

    Seriously, if you listen to Republican rhetoric and when they say “people,” you mentally substitute “people making at least a quarter million a year,” it actually makes sense. Exemplae gratis: “people don’t support the minimum wage,” “people want lower taxes,” “people like George Bush.”

    Now congressional Democrats have learned how to be Republicans.

  • 2. Eli  |  December 15th, 2007 at 12:05 am

    Dollars deliver the votes, and politicians will genuflect to whatever delivers the votes.

    I’ve said something similar about the definition of “people” on a couple of occasions: That Republican and pundit references to what “the American people” want or believe are wildly out of synch with what polls report *unless* you define “people” or “Americans” as synonymous with “Republicans”. Then everything they say makes perfect sense.


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