“If you change the law, change the law.”
by Victor
A nice story pointing out the flaw in the “I’m only following the law” argument. Carried interest is taxed at a low rate because the private equity industry has made it so. Needless to say, I can’t get a meeting with a Senator. Rubenstein can meet with anyone he wants.
In a similar vein, the private equity chief David M. Rubenstein, who served in the administration of President Jimmy Carter, said during a panel discussion that businesspeople like Mitt Romney shouldn’t be blamed for paying low taxes — that’s the government’s fault. “You change the law, and they’ll pay the taxes,” said Mr. Rubenstein, a co-founder and managing director of the Carlyle Group. “Romney said — and I’m not his defender — he’s paying whatever the law required. If you change the law, change the law. But don’t criticize him for paying the taxes that the law requires him to pay.”
There’s some truth to that argument. After all, even Warren Buffett, the inspiration for Mr. Obama’s Buffett Rule, and the class traitor Mr. Soros today pay only those taxes required of them. Their point, as Mr. Soros told me, is that the tax rate should be higher. But of himself and Mr. Buffett, he added, “the Republicans are trying to save us from taxation — against our will.”
Yet the Rubenstein defense goes only so far. The low tax rates for millionaires are neither a natural law nor an act of God. They are the result of a political process that, since the late 1970s, has pushed rates, particularly at the top, hugely downward. Business has been instrumental in that shift, both as a matter of general ideology and in a dogged and skilled fight for sector-specific tax breaks, like the carried interest provision.