House GOP takes on the rich with tax reform plan
The GOP is taking on wall street.
Republicans want to close one of the most ridiculous tax loopholes in America known as "carried interest."
As part of a major tax code overhaul, Republican House Ways and Means Chairman Dave Camp said Wednesday he will close a loophole that has netted the top Americans billions of dollars.
Whose benefited?
People like:
- Stephen Schwarzman from Blackstone - worth $7.7 billion.
- Henry Kravis from KKR, another private equity firm - worth $4.7 billion.
- John Doerr from Kleiner Perkins - worth $2.9 billion.
According to the Joint Committee on Taxation, they would pay billions of dollars over the next decade if the loophole was closed.
At a time when every dollar counts, some would there'd be celebration on Capitol Hill.
But Republicans and Democrats have been afraid of challenging these business titans and their lobbyists.
House Speaker John Boehner was asked about carried interest on the Hill today. His response? "Blah, blah, blah," before going on to say the plan is "the beginning of [a] conversation" lawmakers need to have about tax reform.
President Obama is also guilty of caving to lobbyist pressure. He promised to close the loophole in 2007, and it's still wide open.
The loophole allows these people to pay half the taxes they would otherwise. They currently pay a tax rate of 20%, but their regular income tax rate would top out around 35% under Camp's plan.
Some loopholes make sense. Camp's plan has a few supporters, but not many.
Erin Burnett explains why:
When you're a partner in a private equity firm, you get a cut of the profits you make from investing other people's money. Usually, it's a 20 percent cut.
If you invest money with one of these men and your investment goes up in value, they get to keep a cut of the profits. Now, it's your money that was put at risk. While you get to pay the lower capital gains rate of 20% so do the guys, who simply manage your money. And their cut of the profits is a huge part of the money they earn.
Both parties get to pay the lower rate provided to Americans to encourage people to take risk - except it's not their money and it's not their risk.
They get to pay 20% on what is essentially their wages. Everyone else's wages are taxed at an ordinary income tax rate.
Burnett asks Michael Farr, Author of "Restoring Our American Dream: The Best Investment," whether he thinks the tax reform will actually happen.
"What I'm hearing from my friend Greg Valliere at Potomac research is that the Republicans don't want to touch much of this a minute before they have to and certainly not before the mid-term election," says Farr. "I think something could happen but I think it's going to take a while."
Billionaire Sam Zell: "The one percent work harder"
Almost half of the world's wealth is now owned by just one percent of the population, according to a recent Credit Suisse report.
How does that happen?
Well, Billionaire real estate investor Sam Zell thinks one percent just works harder.
"The 1 percent are getting pummeled because it's politically convenient to do so," Zell said. "The problem is that the world and this country should not talk about envy of the 1 percent, they should talk about emulating the 1 percent. The 1 percent work harder, the 1 percent are much bigger factors in all forms of our society."
Zell was responding to the now-infamous comments by venture capitalist Tom Perkins. In a letter to the Wall Street Journal, Perkins wrote:
"I would call attention to the parallels of fascist Nazi Germany to its war on its 'one percent' namely its Jews, to the progressive war on the American one percent, namely the 'rich.'"
Perkins later apologized for comparing today's treatment of the wealthy to the persecution of Jews in Nazi Germany.
But he's still standing by his message of class warfare.
OutFront: Democratic Strategist Paul Begala and Conservative Columnist Reihan Salam.
Dow sinks 326 points on weak data
The Dow tumbled more than 300 points Monday afternoon, or almost 2%, after a much worse-than-expected reading on manufacturing activity. The S&P 500 and Nasdaq were down more than 2%.
Dow tumbles 300 points on weak data
Companies like Microsoft and G.E. were also down 3 percent. And AT&T fell more than 4 percent. So far this year, the Dow is down 1,200 points.
OutFront: Brent Wilsey, President of Wilsey Asset Management.
Jim Cramer: The future is social media
The market takes a sharp drop.
Stocks sink on Fed, emerging market fears
Stocks were down nearly 200 points after the Federal Reserve announced it's reducing stimulus spending by another $10 billion a month.
Despite recent volatility in the market, the move underscores the Fed's confidence in an economic recovery.
Fed continues taper as Bernanke's term ends
To break this all down, Erin Burnett's friend and former colleague Jim Cramer is OutFront. He's the author of the new book,"Jim Cramer's Get Rich Carefully."
Jesse Jackson: The 'War on Poverty' is not over
CNN's Don Lemon talks to Reverend Jesse Jackson about the anniversary of the 'War on Poverty."
Washington (CNN) - Fifty years ago, in his State of the Union address, President Lyndon B. Johnson declared a "war on poverty."
"This administration today, here and now, declares unconditional war on poverty in America," he proclaimed, speaking to Congress and the nation.
Johnson worked with Congress to pass more than 200 pieces of legislation that attempted to address the more than 37 million people living in poverty at the time.
Johnson's policies are considered the largest expansion of social safety net programs in history. He created Medicare and Medicaid, which provided health care to millions of low-income people and seniors. He also launched the Head Start early education program and made housing available for low-income people. On top of that, Johnson successfully expanded funding for K-12 education, passed the Voting Rights Act and provided money for artists through the National Endowment for the Arts.
The programs began to immediately reduce the number of people living in poverty, especially seniors. The poverty rate dropped to 12.1% by the time he left office. While an improvement, poverty still existed.
Johnson saw problems with his agenda almost immediately. Most notably, funding and focus turned to another war - the Vietnam War - hampering Johnson's vision.
Fifty years later, partisan battles over the size, efficiency and worth of government assistance programs persist. And the success of Johnson's war on poverty has been heavily debated. The poverty rate has followed a hilly path that reached as low as 11.1% in 1973 and hit a high of more than 15% in 1983, 1993 and 2010, and it's still at that level today.
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