When members of Congress voluntarily take steps — as the Senate did Monday — toward banning their quiet privilege to use insider information to make profitable investments in stocks and securities, you know public confidence in Congress is at an unusually low ebb and they’re trying to regain trust.
But if they fail at the same time to ensure that the wealthiest Americans, who are also their biggest donors, pay income taxes at least at the same rate was Warren Buffett’s secretary, you also know they’re still dodging the remedy for this nation’s yawning wealth gap between mega-millionaires and multi-billionaires and the other 99.9 percent of Americans. And public trust still hangs in the balance.
Both of these issues are in play at the moment. There’s some progress on the former and none — nada, zero — on the latter.
Members of the Senate voted 93-2 on Monday to consider a bill to ban members of Congress from trading in stocks and securities on the basis of their privileged access to insider information. They glean that information from myriad closed hearings and committee meetings on military contracts, federal spending and monetary and economic policy decisions that have not become public. Which helps explain why so many members become millionaires after they get elected.
The bill the Senate plans to consider would also require members to disclose their purchase and sales transactions on stocks, bonds, commodities and securities on an easily searchable public Web site within 30 days. That would offer public transparency and some degree of accountability. Let’s hope they actually pass the bill.
Stung equally by a dismal 15 percent public approval rating for Congress, more than 250 House members, including 90 Republicans, have signed on as co-sponsors of a similar bill. Some senior Republicans even want to include non-public information on real estate deals, the source of super-sized profits for development insiders.
The ban on insider trading by members of Congress, which Obama called for in his State of the Union address, would be fair. It should have been enacted long ago, but greedy members always blocked any such proposal.
More valuable to the nation would be legislation — still staunchly rejected by Republicans — requiring earners with annual incomes above $1 million to pay at least 30 percent in federal taxes on their taxable income, as Senate Democrats and Obama propose. That would be imminently fair. That’s lower than the 33 percent rate which applies to net taxable income between $212,300 and $379,150; and lower than the top rate of 35 percent which applies thereafter.
Indeed, megamillionaires (i.e., Mitt Romney) and billionaires usually pay income taxes at a rate of less than 15 percent (the rate paid by low-to-middle-income families with taxable incomes between $17,000 and $69,000) because most of their income is from dividends, carried interest and capital gains, which are taxed at 15 percent.
That’s why the nation’s top 25 hedge fund managers, with annual incomes averaging $800 million, pay just a 15 percent rate in income taxes.
This stunning gap in the progressive income tax, awarded to the rich by the Bush II administration, reaps vastly disproportional dividends mainly for the ultra rich. Fully three-quarters of capital gains income, for example, goes to the top 1 percent of earners, and then mostly to the top one-tenth of one percent.
Restoring tax progressivity at the levels that prevailed in the Clinton administration would produce around $900 billion in revenue over the next 10 years to help work down the national debt. Alas, Republicans still want to shower privilege on the ultra-rich, while cutting programs for the middle class and the poor.