TAX ALL INCOME SUBJECT TO THE FEDERAL CARRIED-INTEREST TAX BREAK

WHEREAS, private equity firms, hedge funds and other financial entities make exorbitant fees for investing other people’s money; and

WHEREAS, the owners of these firms also receive up to 20 percent of the profits on these investments of other people’s money as “carried interest”; and

WHEREAS, the federal government taxes carried interest at only 20 percent; and

WHEREAS, regular income received by high-income private equity and hedge fund managers would be facing a tax rate of 39.6 percent; and

WHEREAS, presidential candidates in both parties, financial experts and working Americans agree that millionaires and billionaires should not receive preferential treatment on their taxes; and

WHEREAS, this preferential treatment costs the federal government an estimated $18 billion per year; and

WHEREAS, education at all levels is underfunded as a result of a lack of tax revenues; and

WHEREAS, the Legislature in the state of New York has introduced legislation to tax all carried-interest income at a rate of 19.6 percent, which is the difference between the 20 percent and 39.6 percent federal rates; and

WHEREAS, if the state of California were to join with the state of New York and implement this same type of tax, it would generate an estimated $1.62 billion in revenue:

RESOLVED, that the American Federation of Teachers calls for states to join New York in considering passing a statewide carried-interest tax; and

RESOLVED, that the AFT will work with state federations and other partners to advance this issue as part of its broader efforts to see that public services are fairly and adequately funded.