The new york times, The Bes tLaws Money Can Buy July 12, 2010 Essay

The new york times, The Bes tLaws Money Can Buy July 12, 2010 - Essay Example The Private Equity council, which has eight partners, has paid Capitol Tax $ 30000 per month for keeping the taxes of its members low. Considering the amount spent by other firms on the same issue, the total amount spent for a favourable carried-interest tax i.e. the 20% fee that fund managers get from the fund's profits, may be $15 million. With lobbying, the law makers agreed to a compromise on carried- interest tax. That is, part of the earnings will be taxed at the regular rate and another part at a lower capital-gains rate (Brill). The new proposals are made effective from 2011 meaning additional tax savings worth $2 million for clients. The intention of the reformers has been to make the Americas’ wealthiest pay taxes the same graduated income-tax rate that ordinary persons do (Brill). But the opposite happened. Financial-regulatory-reform bill To reconcile differences over the financial reform bill between the Senate and the House of Representatives, two week- long conf erence committee was convened and the proceedings were telecasted to make the process transparent. But the real action happened in the night after the televised sessions are over. In public, the two sides made offers and acceptance which were fixed earlier behind closed doors (Brill). 2000 lobbyists are registered in 2010 to lobby for the financial industry. They watch proceedings of the conference live and perform surgical strikes (Brill). Volcker Rule The Volcker rule prohibits banks from putting their own money into risky ventures such as private-equity or real estate deals (Brill). It is aimed to prevent another financial crisis. Bankers do not like such rules. So their lobbyists tried to insert some provisions that would allow some percentage of funds to go into high-risk deals, delay the rule's implementation or exempt some big players (Brill). Two lobbyists tried to influence the Volcker rule. The argument of one lobbyist is that the government is giving tax credits for encou raging green energy investments. As banks making consistent profits have large tax liabilities, they can make use of tax credit. Hooper of Capitol tax tried to get the same benefit for members of the American Wind Energy Association. According to Hooper, lobbyists work with legislators and staff to avoid unintended consequences of well-intended proposals (Brill) The lobbyists were able to get exception for most mutual fund companies and allowed banks to manage their funds. Banks can make investments up to 3% of their capital. Banks were allowed to define their capital. Those who got exception on the basis of energy deals won a provision tucked into a paragraph on page 670 that, depending on how the implementation rules get written, might allow exceptions for investments in small or start-up businesses that "promote the public welfare (Brill)." Originally, the House Bill consisted of 1615 pages. The Senate version consisted of 165 pages. The final Bill, however, consisted of 2319 pag es. On every page, dozens of phrases were added which have diverse interpretations. Variations in language imply millions in profit. The more complex bills are becoming, it becomes easier to manipulate. President Obama, does not permit lobbyist to function in his office. The 1914 law establishing the Federal Trade Commission was eight pages (Brill). The 1935 Social Security Act, which also included unemployment compensation, child-welfare services and a complex allotment to