The outsized power of corporations and CEOs in our economy and political system must be brought to heel. Before the financial crisis, the largest banks borrowed excessively — gambling with taxpayer money with little oversight. It is time that we close the many tax loopholes that encourage risky investments by Wall Street, corporations, and the wealthy. Instead of cutting tax rates for corporations and wealthy people, we need to comprehensively reexamine the adequacy and fairness of our current tax system that continues to perpetuate record income inequality.
Through a budget procedure called “reconciliation,” which only requires a simple majority to pass, the Senate GOP is working on a tax “reform” plan. Senate Finance Committee Chairman Orrin Hatch has asked for input on the U.S. tax system, and People For the American Way is part of a coalition of more than 50 groups that have submitted a proposal. The “Take On Wall Street “ proposal would raise more than $1 trillion in additional revenue and discourage dangerous Wall Street speculation by requiring the financial services industry to pay its fair share of taxes. Additionally, the coalition has submitted over 190,000 petition signatures.
The Take On Wall Street plan includes the following:
- Closing the carried interest loophole which allows billionaire Wall Street money managers to pay lower tax rates than nurses or construction workers;
- Closing the CEO Bonus loophole, which allows corporations to deduct CEO salaries above 1 million dollars a year from their taxable-income as long as they call it ‘incentive pay’;
- Creating a Wall Street sales tax that would discourage short-term bets and generate billions in new revenue for services our communities need;
- Creating a small tax on the riskiest big bank borrowing to discourage future bailouts and raise revenue for important public services;
- Closing the reinsurance loophole which allows hedge funds and certain insurers to transport money to untaxed foreign “reinsurance” subsidiaries;
- Ensuring complex derivatives contracts are not used to avoid taxes.
Our current tax system favors the super-rich at the expense of everyday Americans. Congress should change this through real tax reform that closes loopholes instead of creating more tax cuts for Wall Street.