Mike Sommers is the former Chief of Staff to former Speaker of the House John Boehner. Last year, and for more than two decades before that, Mike Sommers was the “go-to” guy for some of the most powerful people in Washington when it came to getting things done in the House of Representatives. He was at the center of every tax and budget fight. He knows all the important people in Washington, a lot of whom owe him a favor or two.
Mike Sommers has just become the president of the Private Equity Growth Capital Council (PEGCC), an organization dedicated to defending the carried interest loophole, one of the most indefensible tax loopholes in the American tax code, on behalf of Wall Street millionaires. It allows investment managers to pay the capital gains rate, rather than the ordinary income tax rate on income they earn managing other people’s money, despite them having none of their own capital at risk. The loophole is based on 16th century shipping law meant to protect captains against the loss of their boats.
In a move that illustrates how corrupt the American political system has become, Mike Sommers in now in charge of defending a loophole that allows hedge fund billionaires to pay lower tax rates than dental hygienists, zookeepers, and the guy who valets their cars at fancy restaurants. Apparently, hedge fund managers believe that sitting behind their computer screens is as perilous as navigating the high seas on a wooden boat 400 years ago.
This year, because of the Private Equity Growth Capital Council and Mt. Sommers, hedge fund managers will pocket $1.8 billion they don’t deserve.
When Patriotic Millionaire representatives met with members of Congress to urge them to close this indefensible loophole immediately by passing the “Carried Interest Fairness Act”, Congressmen, Democrat and Republican, said the same thing. “Of course” they support closing the carried interest loophole, “However” it was “very important” to “address the issue as part of comprehensive tax reform.” In other words, they were prevaricating.
“Comprehensive tax reform” will likely be on the agenda in 2017. Who will be at the negotiation table? You guessed it – Mike Sommers. That’s part of his big new job that’s going to cost our country $180 billion. (Edited version of a report from Patriotic Millionaires).
This is why so many people are supporting Bernie Sanders. The current system undermines the spirit of the Constitution and offends against fairness and the tenets of Epicureanism. And that’s for starters.
Robert, I couldn’t possibly agree more, the US tax code is a disgrace. Many conservatives claim that the marginal tax on corporate profits is the highest in the world. But if you take into account all the loopholes and deductions, American corporations actually pay less than in any other developed country. I think Bernie Sanders’ tax plan is fantastic- every American should study it in detail. Taxes on the poor are hardly raised at all. Taxes on the middle class go up slightly, but that is more than offset by having healthcare and tuition being provided for free. Taxes on the rich go up considerably, but compared to the rates in other developed nations, they are only very slightly above average. It’s a fair system that will help to alleviate poverty and make the investments in infrastructure and education America so badly needs.