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COLA, CARRIED INTEREST, TAX PROGRESSIVITY ETC.

October 25, 2015

COLA, CARRIED INTEREST, TAX PROGRESSIVITY ETC.

We have been informed that there will be no increase in the Cost Of Living Allowance for Social Security recipients (COLA) for the coming year because inflation is so low and have  also been told that there will be no hearings by House committees on the advisability of ending the “carried interest” tax break (among others)  given to the superrich several years ago by Republicans, a tax break that has made and is making hedge fund operators, equity fund operators, vulture capitalists like Mitt Romney and other investors  lots of untaxed money.

We all can remember that Mitt made 21.7 million dollars in 2010 and paid an overall tax rate of 13.7 percent for that tax year, a rate less than that paid by the workers who clipped the vines on his estate(s). How can this be, since we pay lip service to progressivity of the tax ever since it was adopted over a century ago in 1913? Why do ordinary Americans who work for a living and who are additionally victimized by wage inequality pay taxes on their pathetic incomes at a rate higher than zillionaires like Mitt? That’s progressivity? It is not; politicians whose campaigns have been funded by the rich have made a joke out of the concept that the more you earn the more you pay. Republicans have reversed the process: The MORE you make the LESS you pay.

How do you pull off such an insult to progressivity and a hit to our treasury? Easy. Just redefine income as “carried interest” or “capital gain” or whatever and apply a different tax rate to income thus derived. Carried interest, of course, is by any honest definition ordinary income; it is neither “carried” nor “interest” but manufactured fiction by tax scriveners. Much of Mitt’s income in 2010 was designated as “carried interest,” whatever that in fact is, and the next to nothing tax he paid on it is nothing more than a gift from the GOP, and at your and my expense, since we have to make up what the rich do not pay or “put it on the bill,” as Bush did with his credit card wars not so long ago, a bill for which you and I remain liable to pay down the road.

The easy answer to the question of why working Americans frequently pay at a higher rate of tax on their incomes than the superrich is this:  because such a scheme is in consonance with the language of the Internal Revenue Code – and who is in charge of the terms and conditions of that code? Republicans, who (in view of healthy campaign contributions) never saw a tax break for the rich they didn’t like (nor one for the rest of us that was worthy of the light of day unless as a political bargaining chip for further handouts to and corporate welfare for the rich).

This is the same code that permits American multinational corporations to stash their profits overseas and not pay taxes on such profits until repatriated to this country while their corporate counsel negotiates with the IRS on what the rate of tax will be if such profits are repatriated. If you or I try negotiating on rate at the local IRS office, expect a visit from the funny farm. The code excludes any such consideration; only the rich and well-connected need apply. You and I are persona non grata who pay the taxes the rich should be paying so as to keep them in the manner to which they have become accustomed, i.e., welfare recipients.

As to tax breaks for the poor and middle class by Republicans who dominate both houses of Congress (a class that cannot afford to pay massive campaign contributions), forget it. Stop whining and pay up, and while you’re at it, knock off the whining and live with today’s federal minimum wage (which guarantees poverty status for a family of four),  garnishment of your social security checks to pay off delinquent tuition loans that cannot be discharged in bankruptcy etc. etc. etc. You 47 per centers are just a bunch of socialists who are looking for a free ride and listening to Bernie Saunders and not Paul Ryan, the apparent Republican choice for Speaker and a true apostle of free market economics who bases his views on the Chicago School of Economics and that of Ayn Rand, disciple of “greed is good” and Social Darwinism. So shaddup already! Be glad you live in a democracy. Silence!

My followers know that I often complain about the Internal Revenue Code and Bankruptcy Code and have repeatedly called for a total redo of their respective provisions in order to do justice and fairness to all Americans since both such codes are so patently skewed in favor of corporate America, thanks to corporate control of the Republican Party’s political apparatus. Consider this to be another such complaint. It won’t be the last one.

Personal Admission – I expect to continue complaining about the Two Americas the Republicans have fashioned with their legislative tricks played on the American people, one menu for the rich and the leavings for the poor and (if it still exists) the middle class. Candidly, I expect little to no relief from the current crop of Republicans, who are having enough trouble governing themselves in sharing the results of legislative dominance with their bitter intramural brawls, but I think there may be political value in keeping these issues on the front burner in the hope of replacement of such brawlers and, in time, a fair and just outcome for all ordinary Americans who are currently mistreated and even insulted by the corporate-funded GOP as it panders to the bottom lines of the superrich and simultaneously denies a raise in the minimum wage to millions of poverty-stricken Americans, among other such economic atrocities masquerading as “policy.” Like, policy for whom?

We clearly and desperately need a change in legislative personnel if we and perhaps even our democracy are to survive a possible descent into Third World status as a banana republic where only the rich and the poor hold forth. Join me in the very important business of making such personnel changes this next election.  GERALD     E

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