Earlier this week, the CEOs of 18 corporations wrote an open letter to Treasury Secretary Tim Geithner opining that it would be a mistake to increase the tax rate on dividends and capital gains as called for in the Obama administration’s budget. The budget treats investment income the same as ordinary wage income for households making more than $250,000.
As Citizens for Tax Justice noted, the arguments used by these CEOs to protect their own low tax rates are bunk. In addition, the CEOs oversee companies that also have exceedingly low tax rates. For instance, signing the letter were:
— Gale E. Klappa, Wisconsin Energy Corp. — Average Negative 13.2% tax rate 2008–11
— David M. McClanahan, CenterPoint Energy — Average Negative 11.3 tax rate 2008–11
— Lowell McAdam, Verizon Communications Inc. — Average Negative 3.8% tax rate 2008–11
— James E. Rogers, Duke Energy Corp. — Average Negative 3.5% tax rate 2008–11
— Benjamin G.S. Fowke III, Xcel Energy — Average 1.0% tax rate 2008–10
— Gerard M. Anderson, DTE Energy Co. — Average 0.2% tax rate 2008–11
— Gregory L. Ebel, Spectra Energy Corp. — Average 13.6% tax rate 2008–10
— Thomas A. Fanning, Southern Co. — Average 17.4% tax rate 2008–10
It’s bad enough that these corporations are contributing so much to the fact that corporate taxes are at a forty year low. But to then turn around and advocate for preserving the low rate on capitals gains — which is a leading contributor to income inequality — really adds insult to injury. Remember, it was conservative icon Ronald Reagan who completely equalized the treatment of wage income and capital gains income, rejecting the conservative argument that a lower rate on investment income is necessary.