Cantwell, Kerry and Warner are siding with the richest on Wall St. over the unemployed

Senate Democrats are proposing legislation titled, The American Jobs and Closing Tax Loopholes Act. The bill will, among other things, extend unemployment benefits and COBRA extensions. They’re trying to schedule for a vote next week before the recess. And, to ward off the usual GOP criticism, this time, they’ve even come up with a way to pay for part of it: Removing a special tax loophole available to money managers. And, it’s a big loophole that allows some of the richest people on Wall Street to pay the lowest tax rate.

From various sources, I pieced together how this tax structure works. Money managers at entities likes hedge fund, private equity firms and hedge funds don’t get weekly paychecks. They’re paid through a system known as “carried interest.” Their income, which is essentially based on a share of the profits of the fund, is taxed at a far lower rate than income tax (15% vs. the top marginal income rate of 35%). So, what does it mean. SEIU’s Lori Lodes explained to Huffington Post:

“How do you explain to the nurse or 911 operator or teacher – who are all struggling to pay their mortgages right now – that Wall Street hedge fund managers or venture capitalists are the ones who will get a special tax break. Their states are cutting back on services and their neighbors are losing their jobs. But somehow Senators have decided to hold up a jobs package because they want to keep a tax loophole for money managers. Never could that make sense.”

What really doesn’t make sense is that several Democrats (albeit very wealthy Democrats) are willing to protect that loophole at the expense of unemployed Americans. I’m told by a source who is very close to the action that the Democrats protecting the tax break for Wall Street types are: Maria Cantwell, John Kerry and Mark Warner.

McJoan explains the situation:

Cantwell and friends are lining up on the side of special tax breaks for money managers. The guys who pay only 15 percent tax on this income–less than what their clerical staff pays in income taxes. We finally get to a point where Dem leaders, including Baucus, agree that extending unemployment benefits is necessary. That agreement was conditioned on finding a way to help pay for it and closing this major loophole has the agreement of House and Senate leadership have found. And now a handful of Dems are jeopardizing it.

Making the politics of the Dems’ position even worse, David Dayen reports that Republicans Snowe and Collins “have no objection to closing the carried interest loophole to pay for the legislation.” It could easily pass with their support.

This isn’t just about extending unemployment insurance to the millions of jobless who would otherwise be dropped off of the rolls. The bill also extends COBRA health insurance benefits for the unemployed, provides funding to states under the Temporary Assistance for Needy Families (TANF) Emergency Fund that helps provide jobs to low-income families. It also includes more money for the Federal Medical Assistance Percentage (FMAP) that shores up Medicaid funding–funding that is critical for states straining to keep people covered during this recession.

So, we could have that — or Cantwell, Kerry and Warner can save the tax breaks for the wealthy.

This is really unconscionable. Why should these wealthy hedge fund managers on Wall Street be protected from paying the same level of taxes we do? They should at least pay their fair share. After all, the rest of us saved their asses and their industry with our tax dollars after they nearly destroyed the economy.

Senators Cantwell, Kerry and Warner need to hear from their constituents — and from anyone who has ever been asked to support any of their campaigns. The message is simple: Don’t protect tax break for Wall Street’s money managers at the expense of Main Street.

Cantwell’s number in DC is: 202-224-3441. Washington State offices numbers are here.

Kerry’s number in DC is: 202-224-2742. Massachusetts offices numbers are here.

Warner’s number in DC is: 202-224-2023. Virginia offices numbers are here.

On October 27, 2010, Joe was one of five bloggers who interviewed President Obama. Joe is a DC-based political consultant with over twenty-five years of experience at both the state and federal level. Joe has managed political operations and legislative efforts for both candidates and issues-based organizations. For seven years, he was the Director of State Legislation at Handgun Control, Inc. He served as that organization's first Political Director during the 2000 cycle. Joe is a graduate of the University of Maine School of Law. In addition, he has a Masters in Public Administration from Lehigh University and received his B.A. from the University of New Hampshire. Joe also has a fun dog, Petey, a worthy successor to Boomer, who got Joe through eight years of Bush and Cheney. Joe likes to think he is a world class athlete having finished the 2005 Chicago Marathon in the time of 4:10. He has completed six other marathons as well -- and is still determined to break the four hour mark.

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