August, 22 2017, 03:45pm EDT
Patriotic Millionaires Slam Mnuchin/Trump For 'Selling Out The Country' On Carried Interest Tax Loophole
“Secretary Mnuchin’s private equity friends are rejoicing,” said former Blackrock MD/Patriotic Millionaires Chair Morris Pearl, “Yesterday, the Treasury Secretary made it clear. The Trump Administration stands with Wall Street”
WASHINGTON
Yesterday in a press event in Louisville, KY alongside Senate Majority Leader Mitch McConnell, Treasury Secretary Steven Mnuchin indicated that the Administration will not close the carried interest loophole for most Wall Street billionaires, including the vast majority of private equity and real estate fund managers. In those comments, Mnuchin parroted a widely-disputed claim of private equity industry lobbyists, saying the loophole will remain open open for those funds who "create jobs." Treasury Secretary Mnuchin's third wife, Louise Linton, has come under fire for comments made after the same Kentucky event.
In response to Mnuchin's comments Morris Pearl, the Chair of the Patriotic Millionaires and a former Blackrock executive, issued the following statement:
"Secretary Mnuchin's friends in private equity are rejoicing today, as the U.S. Treasury is now parroting industry talking points about their alleged benefit to U.S. workers. Hundreds of thousands of pink slips tell the real story. Furthermore, there is no intellectually justifiable reason why fund managers - who do not actually invest their own capital - should pay HALF the tax rate of Americans who actually work for a living. Mnuchin's statement either proves a profound lack of understanding of the difference between being an investor and being an investment manager (doubtful) or a calculated political ploy designed to appease BOTH Trump's base and Wall Street billionaires like David Rubenstein. It is past time for this country to have a public debate on the carried interest loophole. If you want to know who will stand up for working Americans and who won't, look no farther than the politician's position on the carried interest loophole. It will tell you everything you need to know."
Patriotic Millionaires around the country offered the following additional statements:
"It's past time for more tax fairness in our country, and it's beyond past time for the demise of the grossly unfair carried interest tax rule, which illogically and perversely rewards a few thousand money managers and costs all other taxpayers a staggering $10 to $12 billion a year," said Patriotic Millionaire Leo Hindery, Jr., an investor and former CEO of AT&T Broadband.
"I have been the beneficiary of the carried interest loophole for private equity in the past. I can think of no better example of outright corruption in our tax code. It is wrong in the logic, disingenuously distorted in its rationale, and grotesque in its consequences. End it, full stop. Then let's have a debate around intelligent and effective policies to encourage productive investment in the real economy, beginning with incentives and reduced regulatory burdens for small business, not undeserved windfalls for fund managers," said Patriotic Millionaire John Fullerton, President of Capital Institute and former Managing Director of JPMorgan.
"Having worked on Wall Street for over 50 years and managing investment partnerships where I have benefited from the carried interest loophole for over 20 years, I strongly believe that this tax giveaway does nothing to create a better economy for the average American. In my experience, the most talented people are primarily driven by the desire to make correct decisions, and it is a distortion to use the tax system to pick winners and losers. In fact, I wonder if the greed Secretary Mnuchin displayed when his bank evicted thousands of homeowners was fed by this very loophole. Just yesterday the Secretary's wife publicly flaunted her wealth in an Instagram post. This is not the way we give to the economy," said Patriotic Millionaire Art Lipson, Managing Partner at Western Investment, LLC.
"It is disturbing and disheartening, although not unexpected, that Steve Mnuchin is supporting the retention of the carried interest provisions of our tax law. Just look at where he worked before his present position. The carried interest rules are special interest legislation that reduce the tax rate to about one-half of the regular tax rate, benefitting primarily managers of large investment funds on Wall Street. The income those managers make from their activities should be taxed using the same rate structure as applies to most of America's workers, e.g., lawyers, doctors, nurses, factory workers, firefighters, teachers, plumbers, small business owners, office personnel, and the like. Don't Mr. Mnuchin's friends make enough money without this "rich person's subsidy" that could be used for a myriad of other purposes, like helping the homeless or providing education to those who can't afford it?" said Patriotic Millionaire Jonathan Ruga, CEO of Sentry Financial Corporation.
The Patriotic Millionaires have written extensively on the carried interest loophole, addressing the complete lack of economic justification for the rule and the corrosive nature of the loophole on our political system. For further reading, please see below.
- Patriotic Millionaire Alan Patricof NYT Op-Ed: Close My Loophole
- Morris Pearl Breakdown of Private Equity Growth Capital Council Letter
- Morris Pearl to David Rubenstein: Patriotic Philanthropy? which was written in response to the New Yorker article The Billionaires Loophole
- Patriotic Millionaires to Congress: Prove They Don't Own You
- Who is Mike Sommers and Why Should You Care?
- Patriotic Millionaires Challenge Carried Interest Top Lobbyist To Public Debate
To schedule an interview or for further comment, please contact Sam Quigley, sam@patrioticmillionaires.org or (202) 446-0489.
The Patriotic Millionaires is a group of high-net worth Americans who share a profound concern about the destabilizing level of inequality in America. Our work centers on the two things that matter most in a capitalist democracy: power and money. Our goal is to ensure that the country's political economy is structured to meet the needs of regular Americans, rather than just millionaires. We focus on three "first" principles: a highly progressive tax system, a livable minimum wage, and equal political representation for all citizens.
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