The Senate will soon vote on the American Jobs and Closing Tax Loopholes Act; a counterproductive bill that, purportedly, extends unemployment benefits for millions of out of work Americans. And yet ironically, found in the bowels of this legislation is a dangerous, anti-business tax increase that promises to harm American investors, kill American jobs and slow the nation’s long-term economic recovery.
A little-known element of the version of that legislation adopted last week by the House, the “Carried Interest Tax” raises taxes on private equity firms, venture capitalists and real estate partnerships. These partnerships make much-needed investments in American startup ventures, and their returns, upon which they rely for sustained investing, are taxed at the regular capital gains rate of 15 percent.
But under the pending bill, taxes on these investments would increase 40 to 150 percent. Such a tax increase would severely curtail investment, development and growth in urban communities nationwide where real estate investors have created jobs and had a substantive impact on the lives of low-income families. Business leaders and think tanks alike have panned the idea; Steve Forbes characterized it as “economic suicide.”
Of course, the bill’s fate is not sealed.
Senator Tom Harkin, Democrat of Iowa, recently expressed reservations that Leadership would likely fail in corralling the necessary 60 votes to adopt the legislation. New Jersey Democratic Senator Robert Menendez had concerns with the tax provision’s effect on vote whipping. Even Senator Dick Durbin of Illinois, whose primary function is to whip votes for the bill, appeared skeptical in recent interviews the measure would not be gutted.
So in a move that so adequately demonstrates the Democrat’s tone-deaf understanding of the American economy, the desperate Democratic Senate leadership attached the job-killing Carried Interest tax hike to an extension of jobless benefits. As in the House bill that passed last week, the Carried Interest tax will be buried in legislation that renews unemployment benefits for millions of jobless Americans whose government assistance will end before Congress recesses next week.
Under the guise of helping America’s unemployed as quickly as possible, Harry Reid, Nancy Pelosi, Max Baucus and Carl Levin would like to push through this tax increase without scrutiny and without any examination or hearing on the long term effects, particularly how this bill will extend the nation’s dismal unemployment figures into the unforeseeable future.
Leave it to Senator Harry Reid and Democratic leadership to advocate for a legislative measure that promises to shunt millions of Americans into the poorhouse while facially advocating for the nation’s chronically unemployed. Democratic lawmakers are trapping Americans in cycle of government welfare.
The Capitol Hill rumor mill holds that those Senators whose votes Reid and Durbin are most actively courting are moderates, freshman and deal-makers of both parties: Maine’s Susan Collins and Olympia Snowe; Virginia’s Mark Warner; Nebraska’s Ben Nelson; Ohio’s George Voinovich; Massachusetts’ John Kerry and Scott Brown; and Colorado’s Bob Bennett.
To contact directly the offices of targeted legislators, call the Senate switchboard at (202) 224-3121.
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