A Chance to Close a Wall Street Loophole Costing Us Billions
Public Citizen has been working to combat Wall Street recklessness alongside Senator Elizabeth Warren since the 2008 financial collapse, including as a leader of the Americans for Financial Reform coalition. We fought for the Dodd-Frank Wall Street Reform and Consumer Protection Act, which went a long way toward better protecting consumers from the sorts of risky banking practices that caused the economic meltdown. However, Dodd-Frank did not go nearly far enough.
That’s why last week Public Citizen joined Sen. Warren and more than three dozen other organizations to launch the Take on Wall Street campaign.
The campaign is calling on Congress to make five policy changes that will help rein in some of the worst of Wall Street’s greed and excesses. We plan to highlight each of these planks in turn.
Today, we highlight one of the proposals that would put Wall Street on a more level playing field with the American taxpayers that have shouldered the burden for the industry’s past mistakes — closing the “carried interest” loophole.
What is the carried interest loophole?
Money you are paid for the work you do and money you earn from investments are taxed differently. This should not be the case when the work being done is managing investments. However, some wealthy investment bankers have figured out they can nearly cut their tax bill in half by getting paid through investment income, rather than their taxed salaries — leaving average Americans to take up the slack. This loophole in our tax code is called “carried interest.”
How big of a problem is this?
According to one expert, closing this loophole could mean up to $180 billion over the next decade.
That’s real money that can be used to help families still struggling to recover from the recession caused by Wall Street recklessness. Even conservative estimates say it would mean at least $1.5 billion a year, which would be paid by those who could most easily afford it.
What can I do?
Take action at TakeOnWallSt.com to support closing the “carried interest” tax loophole. While you’re at it, you’ll also have the opportunity to sign up for campaign updates and you can find a printable one pager on the carried interest loophole and other resources to get engaged in this important campaign.
We hope that you’ll join with Public Citizen and our partners in the next phase of Wall Street reform!
Bret Thompson is the online director of Public Citizen’s Congress Watch division.