Economy

The IRS Will Close This Tax Loophole -- Unless Wall Street Gets Its Way

Hedge fund managers are fighting to keep a little-known tax cheat that saves them hundreds of millions, if not billions, of dollars. 

(Photo: Ray Tsang/Flickr)
(Photo: Ray Tsang/Flickr) F or nearly a decade, Democrats from President Obama on down have vowed to close the “carried interest” loophole, which allows investment managers to classify a substantial portion of their income as capital gains, benefiting from reduced tax treatment. But there’s another, even more audacious loophole hedge fund managers routinely use to further reduce their tax burden. It involves a form of laundering—cycling money through shell companies pretending to sell a specialized form of insurance. Using this technique, the nation’s biggest hedge fund managers have shielded hundreds of millions, if not billions, of dollars. A couple weeks before a deadline to comment on proposed rules to close this loophole, activists have gotten involved by demanding that the IRS act robustly. They want to highlight this elaborate tax evasion as an example of how hedge funds use whatever strategy they can devise to enrich themselves, to the detriment of ordinary workers and the...

The Progressive Victory You Haven't Heard Of: NYC's Ban on Employment Credit Checks

The new law prohibits the discriminatory screening process, which disproportionately affects the poor and communities of color.

(Photo: AP/Mike Groll)
(Photo: AP/Mike Groll) I n New York, your personal credit history is no longer any of your employer’s business. From universal pre-kindergarten to paid sick days, New York City’s fight against inequality has grabbed national headlines. But recently, the nation’s largest city has quietly taken the lead in dismantling a far less obvious barrier to opportunity: the employment credit check. Thanks to a new law , businesses can no longer discriminate against employees and job seekers simply because they’re late paying bills. The credit check ban is an important salvo against inequality. More often than not, poor credit is the result of bad luck and societal disadvantages, and is associated with unemployment, lack of health care, and medical debt . As a result of credit checks, someone who is out of work will find it more difficult to get another job, falling further behind on their bills in a vicious catch-22. The problem is exacerbated in communities of color , which continue to endure...

SCOTUS Comes Calling on Public Sector Unions

A case that could decimate public sector unions is now headed to the Supreme Court. 

AP Photo/Nick Ut
AP Photo/Nick Ut Service Employees International Union (SEIU) members protest for higher wages in downtown Los Angeles on Tuesday, October 1, 2013. T he Supreme Court was dishing out win after win for liberals: Affordable Care Act subsidies upheld; same-sex marriage made the law of the land; a legal blow administered to the undemocratic process of gerrymandering. But through it all labor activists were holding their breaths as a case that could decimate public sector unions inched perilously toward the Supreme Court. Then late last month labor’s worst fears were realized when the Court announced that in its 2015-2016 session it will hear Friedrichs v. California Teachers Association , a case that centers on the constitutionality of so-called “agency fees,” which require non-members to pay fees related to union bargaining and member representation efforts. “This is a very significant case. It may well be life or death for the unions,” Harvard Law School professor Benjamin Sachs told...

Columbia University Was Invested in Incarceration—Until Students Stopped It

Inside the nationwide campaign to keep university endowments out of the prison business. 

AP Photo/Ted S. Warren
AP Photo/Ted S. Warren In this photo taken on Friday, Oct. 17, 2008 detainees are shown inside a holding cell at the Northwest Detention Center in Tacoma, Washashington, a facility operated by The GEO Group Inc. under contract from U.S. Immigrations and Customs Enforcement. T he private prison industry is a growth industry—exploding by 350 percent in just 15 years. As the federal and state governments are facing slimming budgets, contracting out prison operations to private companies is seen as a convenient way to deal with ever-increasing rates of incarceration and detention. At the same time, such rapid growth has made the private prison industry an especially attractive investment for university endowments, prompting a nationwide, student-led divestment campaign that’s lately seen some notable success. Studies have shown that while private prison operations may help ease some budgetary strain, they perform worse than public prisons on a number of metrics: reducing prison violence;...

The Joy of No

Greece's rejection of austerity was an important step forward, but it also threw Europe's deep divisions into stark relief.  

The Yomiuri Shimbun via AP Images
The Yomiuri Shimbun via AP Images Thousasnds of jubilant government supporters celebrate after the result of the referendum showed the "No,'' majority in Athens, Greece on July 5, 2015. An earlier version of this article appeared at The Huffington Post . T he ‘No’ vote to austerity is a stunning vindication of Greek Prime Minister Alexis Tsipras’s tactical gamble and political savvy. However, the Greeks and the austerity-mongers, most notably in Germany, remain as far apart as ever. The financial press and the European elite played Tsipras’s surprise referendum as reckless and suicidal. Much of the EU establishment was savoring a ‘Yes’ vote, a Tsipras resignation, and a new center-right unity government as enablers of austerity. But Tsipras demonstrated that he has a far surer grasp of his own people than the Berlin-Brussels echo chamber. In the aftermath of the ‘No’ vote, opposition leaders rallied behind Tsipras. The elite press has tended to play this tragedy as a case of Greek...

The Supreme Court's Challenge to Housing Segregation

For decades, the Fair Housing Act's potential was squandered. A recent Court decision may finally change that. 

AP Photo/Patrick Semansky
AP Photo/Patrick Semansky) In this April 8, 2013 picture, a boy shoots a basketball into a makeshift basket made from a milk crate and attached to a vacant row house in Baltimore. I n June, the Supreme Court issued several decisions with big policy implications. Its rejection of a challenge to Obamacare and its endorsement of the right to same-sex marriage have received the attention they were due. A third decision, confirming that the Fair Housing Act prohibits not only policies that intend to perpetuate racial discrimination and segregation, but those that have the effect of doing so, was equally momentous. Yet because the ruling concerned an obscure (to the public) and technical phrase (“disparate impact”), it has been more difficult to understand. To comprehend its significance, a review of its background is in order. Roots of the Fair Housing Act In over 100 cities during the summer of 1967 African Americans rioted, in rebellion against segregated and inadequate ghetto conditions...

Why Labor Law Should Stop Leaning So Hard on the Wagner Act

As the National Labor Relations Act turns 80, we should remember what the law was designed to do—and what it wasn't. 

AP Photo/Mike Groll
AP Photo/Mike Groll A fast-food worker raises her fist during a rally for a $15 an hour wage at the Empire State Plaza Concourse, Wednesday, April 15, 2015, in Albany, New York. T he Wagner Act turns 80 this week and it’s about time that we lessen the old man’s load. For too long, this legislation that was meant to encourage workplace democracy has actually shouldered much of the burden of our nation’s employer-centered social welfare state. It’s high time to get citizens’ health care, pensions and even guaranteed basic wages off its back, and to allow the Wagner Act to do its job: giving workers in the U.S. a real voice on the job. Signed into law by President Franklin D. Roosevelt on July 5, 1935, the Wagner Act (or National Labor Relations Act) marked the first time private-sector workers in the U.S gained permanent federal backing for organizing unions. Under the Wagner Act, if the government certified that the workers had a union—usually through a union election—then their...

The EU's Future in the Wake of the Greek Crisis

This weekend may mark a turning point for Greece's debt crisis, but Europe's problems don't stop there. 

AP Photo/Daniel Ochoa de Olza
AP Photo/Daniel Ochoa de Olza A man sells Greek and European Union flags during a rally organized by supporters of the YES vote for the upcoming referendum in front of the Greek Parliament in Athens, Tuesday, June 30, 2015. T he endgame in the Greek crisis remains murky at this hour despite Alexis Tsipras’s apparent capitulation to the demands of Greece’s creditors: the so-called Troika or “Institutions” consisting of the International Monetary Fund (IMF), the European Commission (EC), and the European Central Bank (ECB). With surprise developments occurring daily if not hourly, it is difficult to stand back from what has transpired to date in order to assess the implications for the future of the European Union and the Eurozone. Still, the exercise is worth attempting. A number of depressing conclusions emerge. No matter how the saga ends—whether in “Grexit” (Greek abandonment of the euro) and the self-imposed austerity that must inevitably follow, or in an agreement with the...

Will the New Federal Overtime Protections Apply to You?

The Labor Department just announced that millions of Americans will now be eligible for overtime protection for the first time. 

AP Photo/Pablo Martinez Monsivais
AP Photo/Pablo Martinez Monsivais In this June 26, 2015, photo, President Barack Obama speaks in the Rose Garden of the White House in Washington. Editor’s note: In 2013, Economic Policy Institute vice-president Ross Eisenbrey co-authored with economist Jared Bernstein a paper that first proposed expanding the eligibility of workers for overtime pay. Yesterday’s Labor Department ruling closely follows their proposal. T he overtime rules the Department of Labor announced yesterday are hugely important. They would restore in one action most of the overtime protections that have been lost over the past four decades through neglect and hostile regulatory changes, and prevent them from ever eroding again. Altogether, 15 million salaried workers would gain the right to time-and-a-half overtime pay or have their existing rights strengthened. Since the New Deal, the law has protected workers from being forced to work overtime without getting paid for it. The Fair Labor Standards Act of 1938...

Greece: Only the 'No' Can Save the Euro

As Greece prepares for a referendum on its creditors' demands for austerity, the future of Europe hangs in the balance. 

AP Photo/Petros Karadjias
AP Photo/Petros Karadjias Pedestrians walk by posters for the NO vote in the upcoming referendum, in central Athens, on Wednesday, July 1, 2015. G reece is heading toward a referendum on Sunday on which the future of the country and its elected government will depend, and with the fate of the euro and the European Union also in the balance. At present writing, Greece has missed a payment to the IMF, negotiations have broken off, and the great and good are writing off the Greek government and calling for a “Yes” vote, accepting the creditors' terms for “reform,” in order to “save the euro.” In all of these judgments, they are, not for the first time, mistaken. To understand the bitter fight, it helps first to realize that the leaders of today's Europe are shallow, cloistered people, preoccupied with their local politics and unequipped, morally or intellectually, to cope with a continental problem. This is true of Angela Merkel in Germany, of François Hollande in France, and it is true...

Here's How to Make the Fed More Transparent and Accountable

Fed leadership has long been dominated by the 1 percent. The Community Advisory Council could help change that. 

AP Photo/Andrew Harnik
AP Photo/Andrew Harnik The Marriner S. Eccles Federal Reserve Board Building, Friday, June 19, 2015, in Washington. T he Federal Reserve has long faced fierce scrutiny from members of Congress, community leaders, and the press for its lack of transparency. Fed Chair Janet Yellen, still early in her term, has signaled an intention to improve transparency and hold the Fed accountable to the public interest, and she’ll face an important test this month as she starts deciding whom to appoint to the newly formed Community Advisory Council. In the most recent example of Fed’s insular system of governance, Bloomberg Business revealed concerning news about the recent appointment of Patrick Harker as president of the Philadelphia Federal Reserve. Harker had served on the bank’s Board of Directors prior to his appointment, and was even on the search committee interviewing candidates for the presidential slot. Then, in a behind-the-scenes maneuver reminiscent of Dick Cheney’s infamous self-...

Are the Dems Being Sucker-Punched on Trade?

With TPP on the ropes, passage hinges on a paltry worker assistance program. 

Photo By Tom Williams/CQ Roll Call/AP Images
Photo By Tom Williams/CQ Roll Call/AP Images House Minority Leader Nancy Pelosi conducts her weekly news conference in the Capitol Visitor Center, June 4, 2015. This article originally appeared at The Huffington Post . T hanks to a last-minute deal last Thursday between President Obama and the Republican leadership in Congress, the fast-track bill is still alive. Its passage depends on whether a handful of Senate Democrats can be persuaded to go along. Quick recap: The trade negotiating authority that Obama needs to complete his cherished Trans-Pacific Partnership has been linked to passage of Trade Adjustment Assistance (TAA). The House at first voted down assistance in order to kill the whole deal, but then Republicans promised a separate vote on adjustment assistance; and so the House on Thursday narrowly approved fast track, 218-208, with 28 Democrats in support. Now the Senate has to concur. Back in May, when the Senate voted for the package that was rejected by the House, 14...

A Big Test for Janet Yellen

The Fed has a lot of power to hold big banks accountable. A grassroots coalition wants Yellen to use it. 

AP Photo/Manuel Balce Ceneta
AP Photo/Manuel Balce Ceneta Federal Reserve Chair Janet Yellen speaks during a news conference following a Federal Open Market Committee meeting in Washington, Wednesday, June 17, 2015. A coalition of California community groups and a local legal aid agency have come up with a novel way to hold a major L.A. area bank accountable for the devastation it has caused Southern California communities as a result of its risky and predatory practices. The California Reinvestment Coalition (CRC) and Neighborhood Legal Services of Los Angeles County (NLSLA) have asked Janet Yellen—chair of the Federal Reserve, the country’s top bank regulator—to halt a planned takeover of Pasadena-based OneWest Bank by the New Jersey-based CIT Group until these banks pay reparations for the damage they caused. CRC and NLSLA have suggested a price tag of $3 billion to create and preserve affordable housing in Los Angeles County. For a decade up to 2008, banks lived high on the hog as federal regulators looked...

With Oregon's Bill, Paid Sick Leave Gains Momentum

How Oregon became the fourth state to mandate paid sick leave. 

Doug Geisler
Doug Geisler B uilding on a strong and growing level of momentum nationwide, on Friday, the Oregon legislature passed a bill that mandates paid sick leave. Governor Kate Brown, a progressive Democrat, is sure to sign the bill, making Oregon the fourth state to pass mandated paid sick leave. The vote is a significant win for a nationwide movement that’s been quietly gaining steam among cities, states, and presidential candidates in recent years. It’s also coming not a moment too soon. Half of the Oregon’s private sector workers don’t have access to paid sick leave; about 80 percent of the state’s low-wage workers are without it—this legislation will mandate access for somewhere north of 500,000 Oregon workers. The bill mandates that employers with more than 10 workers must offer up to five days of paid sick leave; businesses with less than 10 employees still must provide protected sick leave, though it may be unpaid. Both full-time and part-time workers are covered. The success in...

Bad Faith

Why real debt relief is not on the table for Greece. 

Sipa via AP Images
Sipa via AP Images Angela Merkel, German chancellor, and Greece Primer Minister Alexis Tsipras give a joint press conference, after the meeting, at the German chancellery on March 23, 2015, in Berlin. R eaders of the financial press may be forgiven for thinking that the negotiations between Greece and Europe have one feckless partner—the new government of Greece—and one responsible partner, a common front of major governments and creditor institutions, high-minded in their pursuit of rational policies and the common European interest. The view from Athens is different. On June 11, I attended the hearing of a Greek parliamentary commission investigating the Greek debt. Phillipe Legrain, former adviser to the then-EU President José Manuel Barroso, testified. Legrain is a technocrat, an economist, and a very reserved individual. He spoke in measured tones. The original crime in the Greek affair, Legrain said, was committed in May 2010, when it became clear that the country was insolvent...

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