THE BLOG
01/05/2015 06:12 pm ET Updated Mar 07, 2015

Could Repealing "Corruption Taxes" Be the Democrats' Secret Weapon?

Imagine the approval rating for a politician who could legitimately promise to send a $300 check to every taxpayer every year without raising the deficit...simply by repealing three giveaways that have no economic rationale and were passed only to reward major politically connected SuperPAC contributors.

These giveaways could be called "corruption taxes." The definition of a "corruption tax" is a transfer of wealth to the very rich that no honest congressperson would support if campaigns were publicly financed.

One example of such a tax is the "carried interest" loophole allowing billionaire hedge fund managers to pay taxes at much lower rates than we do. Unless hedge funds are a "social good" like education, mass transit or public health that deserve subsidies because they benefit everyone, this preference has no basis in social policy or economics.

Next would be special tax treatment and other direct subsidies for fossil fuel companies. We are not about to run out of fossil fuels, and if we were, subsidizing these companies wouldn't alleviate the shortage. Production of oil and gas is driven by price, technology, discoveries, etc.., not giveaways. And if any source of energy gets an extra subsidy, shouldn't it be clean energy rather than carbon-based fuel?

A third would be the government's lobbyist -- imposed prohibition on negotiating drug prices. Imagine if you had to pay the sticker price every time you bought a car. That's what the government has agreed to do when it buys drugs.

If these strike as pure giveaways, it's because the cost of corruption taxes has reached a new peak, with a proxy measure being the 22,000 percent ROI that lobbyists earn for their well-heeled sponsors. This mind-boggling ROI is only a "proxy" because the even greater returns to billionaire contributors are invisible and hence unmeasurable, thanks to Citizens United and its progeny. These windfalls for the very wealthy aren't found money -- they come from you and me...and we want our money back.

How much are we talking? It is difficult to attach absolute numbers to these corruption taxes since by definition they are obscured, but the total is in the range of about $300/year/taxpaying household -- roughly $20,000 of your earnings over the course of your taxpaying lifetime -- donated against your will to people who by definition don't need it.

These corruption taxes aren't going to repeal themselves. There is no line on the Form 1040 saying: "Check here if you would prefer to reduce your own tax bill by $300 and instead make billionaire hedge fund managers pay taxes at the same rate you do, close tax loopholes for oil companies, and let the government negotiate drug prices."

Yet that is just about exactly what the proposal is: repeal these corruption taxes and return the money directly, via checks to taxpayers. Shining a bright light on these corruption taxes and bringing them to life -- through dollar-for-dollar restitution -- is key: tangible, immediate benefits would gain overwhelming voter support, whereas the current Democratic rants against moneyed interests are tuned out just like Tea Party rants against much smaller and much more socially and economically justifiable subsidies for the needy.

Speaking of which, repealing corruption taxes may be one issue on which Democrats and Tea Partyers could agree. Real Tea Partyers, that is -- not legislators who rail against Wall Street but then go to work there after they lose re-election. And all Democrats haven't always been pure either. In the past, Senator Schumer of New York has supported the carried interest loophole, perhaps because Wall Street finances his campaigns...although recognizing the futility of making a legitimate argument for his stance, he had previously said that he would be happy to vote to repeal that particular corruption tax, if other major corruption taxes (specifically those involving fossil fuels) were repealed too. More recently, though, he has voted to close the carried interest loophole with no preconditions about other loopholes.

No need. Instead let's take Senator Schumer up on his original offer, which ironically was the inspiration for this idea of combining all the corruption taxes into one bill: repeal all three major corruption taxes together and give the money back to the taxpayers from whom it was confiscated. Alternatively, perhaps could someone could stand up and explain why hedge fund managers, oil barons and drug company CEOs deserve to keep the $300/year that each of us is donating to them more than we deserve to get that money back.

CORRECTION NOTE:
Senator Schumer has supported the carried interest loophole in the past, as the link in the posting indicates and as he says on camera in this 2012 documentary. However, we are informed by Senator Schumer's office -- as noted in the comment below and in the revised paragraph -- that he now supports repeal of what we are referring to as the "carried interest corruption tax." The current version of the posting reflects this changed position.