House Ways and Means Committee Chairman Charles Rangel (D-N.Y.) said on Bloomberg News this weekend that in the interests of “fairness and equity,” he was going to sharply increase the tax rate on so-called carried interest.
Bloomberg went on to report “Rangel said he was ‘not impressed’ with criticism by Senate Democrats such as Charles Schumer of New York and John Kerry of Massachusetts that increasing taxes on private-equity firms and hedge funds could disrupt financial markets and hurt job creation.”
When John Kerry and Charlie Schumer say a tax increase is a bad idea, you know it must be a really bad idea.
I can understand the emotional appeal of Rangel’s tax increase. Who cares if a bunch of rich New Yorkers get their taxes increased? Especially if those rich New Yorkers gave a big percentage of their campaign contributions to Democrats in the last election.
But like Nancy Pelosi’s scheduling of an Armenian genocide resolution last month, this is a really bad time to raise taxes on Wall Street. Several Wall Street firms are reeling from the collapse of the sub-prime mortgage market. Credit is tightening up, and more investors are becoming more and more risk-averse.
And as much as it might seem like a fun thing to do, raising taxes on Wall Street actually really hurts Main Street.
According to the latest polls, most Americans think we are either already headed to a recession or are already in a recession. Raising taxes in a recession is pure lunacy, especially taxes on the entrepreneurs who will create the jobs that will lead us out of a recession.
And those entrepreneurs don’t reside on Wall Street. They reside in Silicon Valley, in Chicago, in Boston, and in towns big and small across the country.
Rangel says that he hopes to get this tax bill done this year, putting off his “Mother of all tax reforms” until next year.
The good news is that President Bush still has a veto pen. The Rangel plan won’t get far this year, but if Hillary gets into the White House, who knows what will happen in 2009?