A group of Patriotic Millionaires recently traveled by private jet to Albany, the New York state capital, to support legislation to close the “carried interest” loophole, a provision that gives Wall Street financiers preferential treatment at tax time. The legislation could capture an estimated $3.7 billion for the state.
This is not the first time the Patriotic Millionaires, a network of 200 business leaders and high net worth individuals, have made their case for closing this egregious Wall Street handout.
“Why somebody who is making $1 million a year running a venture capital fund ought to pay lower taxes than a plumber earning $50,000 a year fixing sinks, I don’t get it,” said Eric Schoenberg, chairman of CampusWorks, Inc. and a Patriotic Millionaire.
In November 2015, the group convened a Capital Hill press conference to urge Congressional leaders to eliminate the “carried interest loophole They were joined by Senator Tammy Baldwin and Representative Sander Levin, lead sponsors of legislation to close the loophole.
Hedge fund managers routinely treat their fees and income as capital gains rather than wage income. This enables them to pay a 15 percent tax rate, instead of 39 percent, the top rate on ordinary income. Closing this loophole at the national level would raise as much as $12 billion revenue, according to Congressional budget estimates.
While public support for taxing Wall Street is high, it’s clear that Congress is not going to move on this legislation quickly. With progress blocked in Washington, DC, the Patriotic Millionaires are taking their fight to the states.
“It is unconscionable that the carried interest loophole allows money mangers in New York pay a lower rate than hard working New Yorkers in every city and town from Plattsburgh to Buffalo,” said Morris Pearl, Chairman of the Patriotic Millionaires, at a planeside press conference.
Pearl is the former managing director of BlackRock, one of the world’s largest private investment firms. “It’s time to close the carried interest loophole and New York has tremendous power to lead the nation towards a more fair and just tax system.”
The Patriotic Millionaires strategy is to maintain pressure on Congress, but to work with state legislative leaders to close the loophole at the state level, repatriating each state’s share of what would be taxed if there were federal action. Alongside groups like the Hedge Clippers, they are gearing up for legislative campaigns in California, Connecticut, Massachusetts, Illinois, New Jersey and Pennsylvania.
The group describes their mission as “building a more prosperous, stable, and inclusive nation.” Their primary focus is promoting public policy solutions that encourage political equality, guarantee a sustaining wage for working Americans; and ensuring that millionaires, billionaires and corporations pay their fair share of taxes.