Bill Moyers: The Plutocracy Will Go to Extremes to Keep the 1% in Control
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MATT TAIBBI: He's an embodiment. In the financial services industry for sure, the very, very rich mostly receive income as capital gains or if they're private equity people, as carried interest.
In both of those, the max rate is 15 percent. So people who make $20 million, $30 million, $50 million a year like Mitt Romney and like, you know, Steve Schwarzman of whoever it is, they pay half the tax rate of, you know, a nurse or a doctor or a fireman or a teacher. And it's considered totally normal in that world.
BILL MOYERS: So they really do consider tax reform a threat?
MATT TAIBBI: Absolutely. I mean every time that there's been any discussion about rolling back the carried interest tax break in particular, there's suddenly been this intense, you know, hurricane of lobbying. And it never seems to get rolled back. Barack Obama promised to repeal that tax break and didn't do it.
BILL MOYERS: Give us a working definition in the vernacular of carried interest.
CHRYSTIA FREELAND: So basically, what this means is that if you're in, if you work in a private equity firm, the money that you earn– so, you invest a little bit of your own money. And the gains that you make on that investment would be treated under any definition as a capital gain taxed at 15 percent. But you also earn money because you are investing on behalf of all of your investors.
That money that you earn, it's called carried interest. And it is treated as a capital gain in the same ways that the gains to the investors are treated.
The economic arguments in favor of the carried interest tax break are so weak. I mean, even Mike Bloomberg, who is, you know—
BILL MOYERS: The tenth richest man—
CHRYSTIA FREELAND: --very far from being a socialist. He has come out and said he doesn't support it. And it says something to you about the power of a very well heeled, very focused lobby group. That, you know, Barack Obama is president. He is opposed to this. He says he's opposed to it. Even Mike Bloomberg is opposed to it. So there's a body of Wall Street opinion that thinks it should go away. It's still there.
BILL MOYERS: But when there was an effort, when the Obama White House and others made an effort to revoke carried interest, the fight was led by people like Democrat Senator Chuck Schumer, representing Wall Street--
MATT TAIBBI: It’s always the New Yorkers.
BILL MOYERS: Yes, the New Yorkers. Of course, that's their constituency, they would say if they were sitting here. But the Democratic Party didn't come to the aid and relief of working people at that time.
MATT TAIBBI: Well right, because again, it's because you have a small, very, very concentrated lobby that is very, very noisy and is very, very specific in what it wants and what it needs. And then there's the rest of us who, how many people are really thinking about the carried interest tax break? So the advocacy against the carried interest tax break is dispersed. It's sort of random. It's not focused, whereas the advocacy for it is incredibly organized. It's disciplined. And it has a ton of money.
CHRYSTIA FREELAND: And it is bipartisan.
BILL MOYERS: Who's looking out for the rest of us?
MATT TAIBBI: Well, there are, I mean, there definitely are good people in Washington. You know, I meet and talk to a lot of them. There are a lot of honest politicians who are trying to do the right thing. But the-- my experience, the money issue is so overwhelming to people in Congress that--