It’s Time to Stop Helping Wealthy Tax Evaders

by Reggie Oldak, Senior Counsel,
National Women's Law Center

The House could do the right thing today.

For years, the National Women's Law Center has been calling for an end to special treatment that enables some of the wealthiest Americans to pay lower income tax rates than ordinary working Americans and dodge payroll taxes at the same time. Private equity fund managers do this by making payment for their services look like a return on passive investment (unearned income) instead of ordinary compensation (earned income).

A bill up for consideration would finally close the loophole for what some call “carried interest”. We call it payment for services, and we think it’s high time struggling families who lack health care, adequate nutrition, and quality child care stop picking up the tab.

The National Women's Law Center has joined with other national organizations to support H.R. 4213, which would fairly and responsibly offset the cost of "tax extenders," those provisions that Congress periodically passes to extend, for a year or so, various temporary tax breaks. We have our doubts about some of the extenders, which mostly benefit corporations, but we support the bill because, in addition to finally closing the “carried interest” loophole, the bill would reverse Congress's tradition of increasing the budget deficit every year by extending these "temporary" tax breaks without paying for them.

The bill also would begin to crack down on very wealthy individuals and corporations who evade taxes by hiding money in countries known as “tax havens.” And, it would require that Congress evaluate the effectiveness of corporate tax breaks before extending them each year, as it does for discretionary spending on programs that assist low-income women and their families.