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July 23, 2007

Norquist Shows His True Colors Again

Grover Norquist is showing his true colors again. It seems that all his talk of a flat tax, populism, and avoiding targeted tax cuts is pure bunk. As Dean Baker over at TPM Café explains, Norquist is really working to advance the interests of the wealthy.

One of Norquist’s current causes is the protection of the tax subsidy enjoyed by the managers of hedge funds and private equity funds. While people with middle class jobs, like teachers and firefighters, typically pay a 25 percent tax rate, and higher paid professionals like doctors and lawyers pay a 35 percent rate, fund managers are taxed at just a 15 percent rate on their earnings.

This special deal is the result of the fund manager tax break which applies a lower tax rate on compensation earned by the people who manage hedge funds and private equity funds than on other wage income.

As a result, these fund managers, many of whom earn more than $100 million a year, and some who earn more than $1 billion a year, pay a lower tax rate than a school teacher earning $50,000 a year. It is important to realize that this lower tax rate is applied to the money they earn as a manager. The tax code already applies a lower 15 percent tax rate to investment income, including investment income from money that fund managers actually invest in their funds.

Norquist is concerned because many members of Congress now want to tax fund managers like teachers and firefighters, subjecting them to the same tax code. Apparently, being subject to the same tax rates as ordinary workers will make life really tough for these fund managers.

I've written before about how Norquist's actions belie his words. I say again now as I did then, whenever Norquist has his way, the poor and middle class end up paying more and the rich end up paying less. By his fruits you can know him.

Posted by Becky at July 23, 2007 10:49 AM