Skip to main content

in a New York Times blog post titled More Chips For Tax Reform.  In case you do not recognize the name, Rattner is a long-time Wall Street player who served as the "car czar" in the first Obama term and currently chairs Willett Advisors LLC, the investment firm that manages New York Mayor Michael Bloomberg's personal and philanthropic assets.  He also is highly visible as the economic analyst on Morning Joe.  Thus when he discusses raising some taxes, it carries a great deal of weight.

Consider his opening paragraph:

Almost lost in the tug of war over whether the top income tax rate should be 35 percent or 39.6 percent is another consequential tax issue: the proper rate for capital gains and dividends.
.   This establishes the framework for his presentation, in which he comes to the conclusion that the President' proposals  to eliminate the special treatment of dividends and raise the Capital Gains rate from 15 to 20% is insufficient:  
Personally, I would go further and raise the capital gains rate to 28 percent, right where it was during the strong recovery of Bill Clinton’s first term, and grab hold of a total of $300 billion of new revenues over the next decade.
 For those who complain that this, along with the about to be in effect 3.8% Medicare tax on unearned income, would serve as a disincentive to investment, he responds
Put me down as skeptical about such dire forecasts. During my 30 years on Wall Street, taxes on “unearned income” have bounced up and down with regularity, and I’ve never detected any change in the appetite for hard work and accumulating wealth on the part of myself or any of my fellow capitalists.
There is much more.

Using as sources the Treasury Department, the Tax Policy Center, and the  Joint Committee on Taxation, the article is accompanied by a chart which notes the following amounts of revenue that could be raised over a decade by each of a series of tax proposals, the figures in billions of dollars:

Increase tax rates on top 2%                                442

$25,000 tax on deductions except for charities      885

28% limit on tax benefit from deductions              584

Tax capital gains at 20% and dividents at 39.6%   242

Buffett Rule (minimum 30% tax rate on                160
        Americans making over $1 million)

Carried Interest taxed as ordinary income                13

Rattner goes through each of these proposals in his text, for example on the subject of "carried interest" which is currently taxed at the 15% capital gains rate:  

As a beneficiary of the carried interest loophole, I’ve seen firsthand the lack of any difference between the work involved in generating a carried interest and the work done by millions of other professionals who are taxed at the full 35 percent rate.
As for capping deductions in some fashion, he would apply this not across the board as Romney proposed, but only to high income families, noting
The highest-income Americans don’t need tax-free health insurance, mortgage interest deductions or deferred taxation on retirement funds.
Rattner also provides us with rhetorical ammunition:  
These types of tax changes would have the ancillary benefit of defusing a specious argument that conservatives love to make: that raising the top rates on ordinary income would hurt small business.

Certainly no small business can claim to be damaged by a higher rate on dividends or capital gains or by the proprietor’s losing some tax deductions.

If you have read Rattner's article, what I have offered so far may seem unnecessary, and I would agree.  He write clearly, and with the authority of someone who knows the system and also understands that his own taxes would likely increase were these proposals to be put into effect.

Let me offer a few more observations.

First, we need to have a much clearer definition of what a "small business" is.  It should NOT be defined merely by the number of employees, as the likes of John Boehner, Mitt Romney, and others are prone to do, but rather in terms of revenue generated.  Remember the famous picture of the early days of Bain Capital Management"?
romney-bain-capital-money-shot_0
There are only 7 people in that photo, which qualifies it as a small business under current rules.  The organization of Bain is such that with the multiple subsidiary organizations each having only a handful of "employee" the entire wealth it controls could be classified under rules of small businesses.   But its function is not job creation, merely wealth creation even at the expense of the destruction of jobs-  by "harvesting companies" as Romney himself said at one presentation.

Second, I do NOT believe we should be moving towards what will be an unacceptable version of a "Grand Bargain" in the lame duck.  Besides the fact that the expiration of the Bush tax cuts changes the political framework drastically, there is also the reality that we just elected a new Congress whose membership is significantly more progressive than the outgoing Congress.  The President ran on tax issues, twice, and the voters have this time by choosing more Democrats (with those Democrats including real Progressives like Alan Grayson and Elizabeth Warren) while Blue Dogs suffered further losses (Ben Chandler) affirmed their desire to see the wealthy pay more before the social safety net is shredded.

Third, we need leadership of the President's economic team that understands all the realities of which Rattner writes so persuasively, hopefully someone who knows how to communicate - on television and to Congress.  

Perhaps by now you can see where I am going with this.  Do nothing before the first of the year.  Replace Tim Geithner at Treasury with Steven Rattner.  Let him move an agenda such as that he describes in this post.  He has a track record of success in the auto bailout, and that auto bailout clearly gave Obama Michigan and Ohio, and probably Pennsylvania and Wisconsin as well.  He understands the finances of the proposals, which he can explain clearly.  He is a good communicator.  He can rightly point out that what he proposes will raise his own taxes.  He understands the system.

At a minimum, we should ensure that all who will be participating in discussions about a Grand Bargain grasp Rattner's argument.  How much better might it be were he the one pushing forth these items, perhaps by putting them all on the table -  now that might really scare some Republicans, especially if done in the context of having let the Bush tax cuts expire so that they are in the position of defending a series of tax breaks for the rich and already overprivileged at the expense of ordinary folks, of whom there are many more.

Just a thought.

Do with this what you will.

Peace?

Originally posted to teacherken on Sun Nov 25, 2012 at 03:47 AM PST.

Also republished by ClassWarfare Newsletter: WallStreet VS Working Class Global Occupy movement.

EMAIL TO A FRIEND X
Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags

?

More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

Egg, Alumbrados, chuck utzman, PLS, LeislerNYC, Sean Robertson, Chi, Upper West, jotter, grollen, slinkerwink, Killer, Gooserock, emal, Sherri in TX, saluda, freelunch, frisco, opinionated, bronte17, cyberKosFan, wonkydonkey, CalvinV, Nate Roberts, Texknight, psnyder, johanus, agincour, HeyMikey, wdrath, lcrp, ppluto, zerelda, kpelligra, Leaves on the Current, sebastianguy99, Armand451, sawgrass727, Dirk McQuigley, radarlady, basquebob, Dobber, fixxit, blue jersey mom, markdd, spunhard, Savvy813, Tuba Les, JanL, Alan Arizona, Jim R, RJDixon74135, berko, martini, kovie, golem, dopper0189, NBBooks, global citizen, Crashing Vor, sceptical observer, ER Doc, hlsmlane, James Kroeger, kurt, nannyboz, Brunette, ms badger, One Pissed Off Liberal, Ken in MN, Habitat Vic, moodyinsavannah, newpioneer, US Blues, OIL GUY, pioneer111, madgranny, Mighty Ike, MKinTN, hkorens, darrow, DarkHawk98, skohayes, alasmoses, rssrai, tofumagoo, smartdemmg, mofembot, elpacifico66, DixieDishrag, shortgirl, statsone, 207wickedgood, lostinamerica, Nebraskablue, sfarkash, haremoor, Words In Action, vtgal, TruthandTrust, coppercelt, mamamorgaine, Captain Marty, The Jester, Progressive Pen, ItsSimpleSimon, DiegoUK, sharonsz, Betty Pinson, USHomeopath, science nerd, redlum jak, ozsea1, spooks51, UTRepub, swale44, Cintimcmomma, Bluerall, OhioNatureMom, smiley7, marleycat, slooterdam, muddy boots, stargaze, VTCC73, bloomin, BlueZ, ratcityreprobate, jadt65, DRo, big mouth, stormicats, David54, Mostel26, barkingcat, EagleMtnLad, TBug, radical simplicity, avsp, tripodisblack, Jonathan Hoag, onceasgt, alpaca farmer, jbob, SanFernandoValleyMom, The Hamlet, georgelshea, Ree Zen, MarEng, Icicle68, ApatheticNoMore1966, shinobi9, RUNDOWN, Fleet

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site