Vice President Biden: No Justification for Carried Interest

Last week CNBC reporter David Rutz and Vice President Joe Biden had a hard hitting exchange about the carried interest tax loophole. The conversation highlighted past statements made by Chief Executive and co-founder of the BlackStone Group, Steve Schwarzman- statements that had shamefully trivialized and objectified one of history’s most tragic events when making an excuse to keep preferential tax codes for the wealthy.

Rutz and Vice President Biden discussed Schwarzman in his relation to the carried interest tax loophole. In 2014, Schwarzman’s $690 million in profits were taxed as capital gains (20%) instead of as ordinary income (up to 39.6% for other high earning workers).

The Obama administration has long attempted to call out this blatant example of money’s corruptive influence in politics by closing the loophole and mandating that investment managers pay ordinary tax income the same as every other taxed worker in America. Schwarzman was immediately threatened and went so far as equivocate the administration’s efforts to “when Hitler invaded Poland in 1939.”

In the feature interview with CNBC, Biden was reminded by Rutz:

“‘When you started doing that, a big Wall Street guy, Steve Schwarzman, said the Obama administration’s like Hitler invading Poland. How do you react to criticism like that? And I would note, you guys haven’t been able to get it done.’

‘I’d say it’s like us liberating death camps,’ Biden said. ‘The truth of the matter is, there’s no justification.’”

Given the questioning, Biden was commendable in his response.

Rutz made it clear that the administration has not been able to close the loophole, but the administration can not be blamed single-handedly for the inaction Obama met when he first proposed closing the loophole in 2007. Special interest groups and lobbyists have flexed their muscles to protect the loophole, and Congress has stalled. Senator Tammy Baldwin (D-WI) and Representative Sandy Levin (D-MI) introduced legislation 9 months ago, known as The Carried Interest Fairness Act 2015, that has yet to go to vote. Senator Orrin Hatch (R-UT), Chair of the Senate Finance Committee, has sat idly on the legislation- a move the Patriotic Millionaires highlighted earlier in April.

While the complete intentions of Schwarzman can’t be speculated, it is appalling to think he found his analogy anywhere close to appropriate. In the years following, Schwarzman has not stepped back from his statement, and the carried interest loophole has not been closed.

As Chair of the Patriotic Millionaires Morris Pearl, a former Managing Director of BlackRock Inc., stated, “I don’t know Mr. Schwarzman personally, but it’s my understanding that he says what he means. He sincerely believes that his after-tax pay (on his gross earnings of $690 million) being cut from 552 million dollars per year to just 416 million dollars per years is the equivalent of Nazi murder. Both the loophole and Schwarzman’s statements are morally indefensible.”

Schwarzman’s contentious statements demeaned the lives of the 5.7 million Poles brutally murdered under Hitler’s occupation. His equivocation lacks the same moral, ethical, or intellectual justifications as the very continued existence of the carried interest tax loophole itself. It’s these delusions combined with millions of dollars in campaign contributions and lobbying that keep these kind of egregious tax policies in place.

Congress should follow the lead of the Obama administration and the American people- and prove that Wall Street does not own the voting process.

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