Private Equity vs Presidents
Trump, Bill Clinton, George Bush, Barack Obama all promised to get rid of “carried interest” which allows Private Equity to make billions… trillions and not pay much in taxes.
“I don’t know what happened,” said Larry Kudlow, the conservative economist who crafted Trump’s tax plan. “I don’t know how that thing survived,” he said, adding, “I’m sure the lobbying was intense.”
|Robert Reich letter 23 Dec|
Since the pandemic began, private equity has been using the flood of cheap money to buy companies at a record pace, and then squeeze them (and their workers) dry. 2021 has been private equity’s biggest ever — reaching a record $1.1 trillion in deals.
So why are Democrats subsidizing private equity’s predatory behavior with this tax loophole? How did the loophole survive the Clinton and Obama administrations when the Democrats controlled both houses of Congress? Why isn’t it even on the current list of tax reforms Democrats went to use to pay for the Build Back Better package, if they can resurrect it in January?
What’s the dirty secret?
“This is a loophole that absolutely should be closed,” said Biden adviser Jared Bernstein. But “when you go up to Capitol Hill and you start negotiating on taxes, there are more lobbyists in this town on taxes than there are members of Congress.”
Last year 4,108 individual lobbyists formally registered to lobby Congress and the executive branch on taxes. The private equity industry alone has contributed hundreds of millions of dollars to congressional campaigns – $600 million over the past decade, according to a New York Times analysis earlier this year.
But here’s the thing. Most of these campaign contributions (bribes) have gone to Democrats. Nearly 60 percent of campaign donations from partners in the private equity industry during the 2020 election went to Democratic candidates for federal office.
The dirty secret is Democrats have depended on campaign funding from private-equity partners — hugely wealthy people who are shafting workers across the land.
My view is the TOP wins – the 1%ers who drive policy through contributions. Again, it is not the Left vs Right as much as the TOP. It is a Republican ideological stand that the rich should pay low taxes but the Dems have been bought. Without the Dems the other tax cuts for the 1%ers pushed through the Republicans would not happen.
Remember it was Pelosi and Schumer who negotiated with the Trump WH for the Dems during the pandemic. Pelosi and Schumer’s top donors are Wall Street banks and Wall Street lawyers. Pelosi said last week that members of Congress should be able to trade stocks (with inside information) because we live in a free market. A corrupt free market.
Let’s remember that Reagan was able to cut corporate taxes because working Americans were talked into paying more payroll taxes to stand up the fake Social Security Trust Fund. The corporate cut and payroll increase merely canceled each other out at the Macro level, but at the Micro level workers had less money to spend and the wealthy had more to invest. And they invested in financial markets instead of business.
We have had a slow growth economy for awhile. Tax cuts for the rich flowed to the financial economy not your economy. It is really that simple. There is more, but it is a rigged system.
But it is not over. inequality can not be fixed because we are still digging our hole. Look at the trend in wealth in the chart and know it comes with more power. They already have enough power to stop the “carried interest” changes needed through five Presidents.
If we can not fix this with both sides saying it is wrong, then we can not fix much of anything. And the other trends are not good either.
A TSP Smart & Vanguard Smart Investor public service post