Bloomberg News had a good idea for a poll: Ask 1,200 of its $20,000-a-year subscribers whether the carried-interest tax break, which lets private-equity and hedge-fund managers pay 15 percent capital-gains rates on their income, is justified.
As Bloomberg says in the poll’s methodology, these respondents “represent an elite group of decision makers in finance, markets and economics.”
And the poll results are a landslide: two-thirds said the low tax rate was “unjustified” versus just 21 percent who said it was okay. Amongst Americans, the numbers were similar: 67-27. Again, these are not exactly populist firebreathers. By even bigger marings they say private equity is beneficial to the economy.
Bloomberg, naturally, pegs its story to news that Mitt Romney paid just 14 percent of his $21.6 million income in taxes in 2010, and it gets some good quotes by directly interviewing some of the respondents. Here’s one:
Gerhard Summerer, president of DZ Financial Markets LLC in New York, said the lower rate is nothing more than “welfare for the rich,” saying the “average American citizen” gets no such breaks. “No one is advocating confiscating anyone’s possessions, but the fair taxation of income,” he said.
And here’s another:
“There is a large and growing wealth disparity and I think it is unhealthy,” Steve Morton, a director at Natixis Securities in New York who took part in the survey, said in an e-mail. “The lower levels of the pyramid don’t have enough money to buy things and keep the economy going.”
Bloomberg asked its investors about Mitt Romney’s tax rate specifically, and 67 percent said it was too low, versus 21 percent who said it was about right (and 2 percent who said it was too high). But carried interest, while glaring, is a relatively small part of the tax system. Eliminating it would raise taxes by about $2 billion a year, which would barely dent the deficit.
But much of Romney’s income came from regular old capital gains, not carried-interest capital gains, and that’s a much bigger deal. Long-term capital gains are taxed at 15 percent too, and that costs the government about $39 billion a year, while concentrating wealth at the top 0.1 percent. I’d like to have known where the poll respondents stand on taxing capital income 57 percent less than taxing work income. Better yet: How much do they think carried interest and capital gains should be taxed?
There are more interesting results here too. The one that stands out most to me: Eighty-five percent say they either fully agree or partially agree that banks need “regulation to prevent them from being too big to fail.” And 72 percent of these what you might call professional gamblers say they think Obama will be re-elected.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.