I told you yesterday about the Winthrop University poll which found that a plurality of Republican and Republican-leaning voters in South Carolina believe that an increase in taxes will be necessary to deal with the budget deficit. So what kind of tax increases would the GOP voters accept?
In my radio interview with the study’s author, Professor Scott Huffmon said that another poll of all Americans addresses that question. According to Huffmon, the definition of “wealthy” by the majority of respondents who said that an increase in federal income tax on the wealthy is OK defined “wealthy” as people who make more than they do.
Obviously then an increase in the income tax, such as letting the Bush-era tax cuts on high income earners expire, becomes more and more popular as the level of income affected is raised. That’s why Senator Chuck Schumer’s proposal to raise the income tax on people making over a million dollars a year resonates better than setting $250,000 a year as the point of increased taxes.
But what other tax increases on income would be acceptable to most folks including Republicans. Since the definition of wealthy is someone else, then some suggestions by Senator Carl Levin will probably be winners for tax hikes.
On September 19th in a Senate floor speech, Mr. Levin took aim at Wall Street.
Today, I want to describe two more of my proposals, each dealing with a tax loophole that benefits Wall Street at the expense of working families and our fiscal well-being. One would end the “carried interest” loophole that allows hedge fund managers to pay the lower capital gains tax rate on their pay for managing investments. The second would end the “blended rate” loophole that gives preferential status to income from derivatives trading, even in the case of derivatives which are held for just seconds. That preferred status is given over the kinds of long-term investments that are more important in helping put capital to work growing the economy and creating jobs.Each of these loopholes amounts to a subsidy. Working American families who pay their taxes every year end up carrying an extra burden because these provisions allow Wall Street to pay a lower tax rate than the rate applied to average workers. I cannot see how anybody can explain to working Americans that they must bear a greater tax burden so that hedge fund managers get a tax break on pay that often amounts to millions of dollars a year, or so that speculative traders can pay a lower tax rate on so-called investments they might hold for just a few seconds.
Hmmm. Making hedge fund managers and derivative traders pay their fair share of taxes and reduce the deficit by over $20 billion in the next decade— tax increases that even Republican voters will like.