Saturday, 2 August 2014
Last updated 12 hours ago
Jan 20 2012 | 12:37pm ET
As Republican president frontrunner Mitt Romney continues to squirm in the aftermath of his admission that he is likely a major beneficiary of the carried-interest tax loophole, two other prominent politicians used the controversy to push for an end to the loophole.
New York City Mayor Michael Bloomberg, once a Republican himself, renewed his call to end the carried interest practice, which allows hedge fund and private equity managers to pay only the 15% capital-gains rate on their share of their investors' profits. And the top Democrat on the House Budget Committee said that the loophole should be closed to pay for an extension in the payroll tax cut.
"If it were up to me, I would end the concept of carried interest," Bloomberg said. "In every industry there are things that were put there perhaps to encourage of discourage certain kinds of economic activity, but that may not be appropriate today."
Bloomberg defended Romney, who qualifies for the carried-interest rate because most of his income comes from his investments and share of the profits at Bain Capital, which he co-founded. "Romney paid he taxes, I assume," Bloomberg said. "He didn't write the tax law. This is ridiculous."
But Hizzoner also used the opportunity to trumpet the fact that he pays the highest federal tax rate, 35%.
"When you take out the money I give to charity, then I pay the highest personal income tax rate," Bloomberg, who is worth almost $20 billion, crowed. "I don't even have carried interest or any of those things. I don't even have a lot of capital gains."
Meanwhile, Bloomberg television's "Political Capital with Al Hunt" gave Chris Van Hollen (D-Md.), the ranking minority member of the House Budget Committee, a platform to call for the end of the carried-interest loophole himself.
"It's an inequity in the tax code, and it needs to be fixed," he said. "If you look at a lot of hedge fund activities, these are people who are not putting their own capital at risk. They are getting a special deal that is not available to other people in the economy."