Quick Thought on Unemployment Benefits

All of us have our pet peeves, and one of mine is the “carried interest” loophole, which lets those who get their income from venture capital, private equity, hedge funds, and real estate limited partnerships pay their taxes at capital gains rates (20%) rather than ordinary income rates (39.6%).

With about 1.3 million people (plus the people who depend on them) losing their unemployment benefits as of today, I went back to check what carried interest costs the Treasury, to see if it would have covered extending those benefits for three months.

Carried interest costs the government between $11 and 13 billion a year*, while the unemployment benefits would have cost $6 billion.

So score one for the caviar and Champagne crowd, and nothing for the Ramen noodle and tap water crowd.

See “A Costly and Unjust Perk for Financiers,” Lynn Forester de Rothschild, NYT, February 24, 2013

More Revenue, But Far From Redistribution

So how much does that Commie redistributionist in the White House want to soak the rich?  Not so much, it turns out.

From “Tax Talks Raise Bar for Richest,” David Kocieniewski, NYT:

“If all Mr. Obama’s tax proposals for wealthy Americans were enacted [ain‘t gonna happen], they would raise $1.6 trillion over the next decade.  And an analysis by the Tax Policy Center, a nonpartisan research firm, found that the increases would be heavily weighted toward the wealthiest. … Those with adjusted gross incomes from $200,000 to $500,000 would face a tax increase averaging $4,446, with people toward the lower end having only a modest increase….

“A married couple with two children earning $300,000 would see its effective tax rate increase to 21.1 percent from 16.5 percent, ….  A married couple with two children earning $2 million would see its effective federal income tax rate rise to 26.8 percent from 21.6 percent.

“About four million of the 114 million American households face a possible tax increase.

“If all of Mr. Obama’s proposals are enacted, those with adjusted gross incomes of $200,000 to $500,000 would see their after-tax income drop an average of 1.3 percent.  Taxpayers with incomes over $1 million would face a decline in after-tax income of 8.8 percent….”

So we’re not talking Marxism-Leninism here, despite what Rush and Sean and Grover would have you believe.

What a Sneak That Mitt Is!

The prize for today’s most unsurprising headline goes to “Romney’s tax plan really does favor the rich,” by Roberton Williams in The Christian Science Monitor.

We know that Mitt has been running around saying that he wants to eliminate taxes on capital gains and dividends for households making less than $200,000.  So this sounds like a way to help families that aren’t super rich.

Except, according to this article, that the $200,000 threshold applies only to ordinary income, not to income from capital gains and dividends.  And who has $200,000 or more in annual capital gains and dividend income rather than salary or wages?  Very, very rich people.

So once again the deck is stacked against those who work for a living.

If Mitt is being deceptive now, does anyone think he’ll be honest once he’s sitting in the Oval Office?