It may only come out to be $2.2 billion a year, taxing carried interest like the money Romney earns, but that's a damn good start.
Bloomberg News: The real reason the tax loophole for private equity mavens must be closed once and for all is that American taxpayers subsidize the private-equity industry -- and its outsize paychecks -- and simple fairness demands that they don’t also get an additional break in the form of lower tax rates.
Investors are on board:
Bloomberg News: Most international investors say a tax break allowing private equity and hedgefund executives to pay lower tax rates than many average Americans isn’t warranted, according to a Bloomberg survey.
As the release of Republican presidential candidate Mitt Romney’s 2010 tax return heats up debate over a 15% top rate on so-called carried interest, two-thirds of those surveyed in the Bloomberg Global Poll say the tax break is unjustified. Romney, former head of Bain Capital LLC, paid an effective rate of 13.9% on $21.6 million of income, when the top income tax rate is 35%.
An effective tax rate for the wealthy is somewhere around 30 percent, when you consider other right offs. This number is often given to argue against doing away with this ridiculous piece of corporate welfare. I remain unconvinced.
Jonathan Sadowsky, chief investment officer at Vaca Creek Asset Management LLC in San Francisco, said he favors eliminating the break because he’s concerned about government deficit spending. Gerhard Summerer, president of DZ Financial Markets LLC in New York, said the lower rate is nothing more than “welfare for the rich,” saying the “average American citizen” gets no such breaks. “No one is advocating confiscating anyone’s possessions, but the fair taxation of income,” he said.
Taxing carried interest as ordinary income would produce about $22 billion over a decade, according to the nonpartisan Congressional Budget Office.