Wall Street’s Private Equity Fat Cats To Pay Lower Tax Rate than Middle-Income Americans Under Biden Plan

This is a rush transcript from the Trish Regan Show, September 24th and may be updated. This following is opinion commentary from Regan. Click here to download and subscribe and follow along with the transcript below.

Apparently, a lot of people are feeling some buyer’s remorse, according to a brand new  poll. Donald Trump, at this moment in time, is currently more popular than President Joe Biden.

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Of course, President Joe Biden has had just a few little minor screw ups along the way. I would imagine a lot of people are more popular than Joe Biden.

That’s something we’re going to talk about that. But, before we get to that, I want to talk about the insanity of what Joe Biden is proposing and what it would do to our economy.

Hello, everyone. I am Trish Regan. Welcome to the Trish Regan show.

And I’ve got to tell you, I was a little perturbed last night when I came across on my Twitter feed, a tweet from the President of the United States, which, clearly was not written by him. (He doesn’t write these things. You see, it’s not very clear really what he does because there’s a lot of handlers, if you would, in the way.)

Anyway, he tweeted out about how he didn’t want to punish anyone success, but that quote, “those at the top have been getting a free ride for far too long. We’re going to change that.”

Yeah, right. That’s what you call a bunch of political nonsense. I know that because he’s talking about taxing people that earn certain amounts of money (which he defines as rich) but he’s not actually talking about closing a loophole for the ultra-billionaires out there, his buddies that backed his campaign!

And that’s what’s so troubling about all this. I mean, if you’re going to raise taxes and your idea is to go after the wealthy, then, gosh darn’t, do what you say you are going to do! Don’t tell everyone that you’re going to do that and not. Really, you’re just going after people who are making a nice living, but they’re not billionaires. I mean, for goodness sakes!

Fat Cat Carried Interest Tax Loophole Remains in Place

You see, there’s this thing called “the carried interest tax loophole,” which I otherwise refer to as “the fat cat tax loophole.”

Private equity bankers, they’ve kind of got it good because they get to treat their income as though it were investment. And, you know, currently the tax on investment is 20 percent.

If they were to treat their income like income then the federal tax would be thirty seven percent. And of course, income tax should be up in the 43% range with Joe Biden if he gets his way. And then, hey, if you tack on New York State or California state or any of these other really liberal places, you could be looking at a very, very high all in number.

But nonetheless, if you’re a private equity banker, well, things are kind of good! Because Joe’s apparently on your side, just like every other politician seems to have been. It’s really hypocritical of Biden to sit there and say, oh, “the rich need to pay their fair share” when the rich people that are backing him and back his party get this wonderfully wild unfair tax break!

So, let me let me get back to what it is, basically, these are folks that advise you on how to invest your money. And so they’ll have a private equity fund and you can put some money with them and then they charge you a percentage of the profits. Right? So they take your  money. If you’re the private equity banker, you say, ‘oh, thank you very much. I’ll take a million dollars. And of that million dollars, I’m going to invest it all. And if we make a return, then I’m going to take 20 percent of that return.’

And guess what? Uncle Joe over there isn’t going to treat that like income. Instead, somehow it gets treated as investment, although it’s not actually the private equity bankers money that he or she is actually investing.

It’s your money or your pension fund’s money. That’s what’s so bizarre about this.

I mean, I get it. If it’s your money, right? And you’re investing in a company, you’re investing in the stock market, then you should have the benefit of a lower tax rate because you’re taking on risk with money that you’ve already paid taxes on.

But in the case of the banker, well, the money that he’s making or she’s making is all through the gains on that investment, which actually isn’t their own money to begin with!

It’s an easy fix and every single politician avoids this one. They just  don’t want to go near it, it’s complicated. I mean, the minute you say ‘carried interest loophole,’ people’s eyes kind of glaze over. I get it. That’s why I call the ‘fat cat tax loophole.’

And it’s a little complicated because you got to explain how people are taking somebody else’s money and they’re investing it and they’re taking a percentage. But let me just boil it down to plain English: It’s not their money that they’re investing, it is not an investment, it is their income, that’s how they are paid.

So why are you treating private equity bankers any different than you would say in New York City firefighter who, by the way, has to pay 24% on his income? Twenty four percent the federal government. But the Steve Schwarzmans of the world, the billionaire private equity bankers, only have to pay 20 percent. That doesn’t make a lot of sense. (By the way, Steve Schwarzman, I do not believe, is a Joe Biden supporter. So, look, it happens on both sides and I’m calling both sides out here.)

But right now, I’m calling the guy in the White House who’s trying to sit there and pretend like he’s giving everybody a tax break when actually he’s not. He’s not.

And how do you like this? His answer to all of all of the spending that he wants to incur is, well, we’ll just tax people more and to make sure that they’re paying their taxes and they’re paying their fair share. Because what we’re going to do, we’re going to employ an army of IRS agents and we’re going to have those IRS agents go after people. So we make sure that we intimidate them, I guess, into paying.

The Republican Party is right now warning of this. They’re calling it an ‘army of auditors’ that Biden is putting together. And according to the House Ways and Means Committee, the Republicans on the committee, I’ll read the statement to you…they said, “While Democrats seek to give the IRS a blank check to build an army of IRS auditors, Republicans want to pass taxpayer protections and restore trust in government.”

Wouldn’t that be nice, wouldn’t it be nice if actually the government would let us, as Americans have a little freedom in all this freedom to keep what we earn? You know, I don’t like taxes. So, you know, I don’t begrudge the private equity bankers paying less. I mean, I wish everybody paid less. Right. But it’s not right to say, ‘hey, you billionaires over there that are helping me out Washington, D.C. and help me get to this Oval Office, I’m going to go easy on you. But you firefighters, you teachers, you police officers, now, you got to pay income tax.’

I mean, that’s just not fair. And so that doesn’t sit well with me because I am somebody who, as you know, believes very much in equality and in equity. What I’d really like to see, frankly, is a flat tax. I mean, that would be the first of all. Right, now you have 61 percent of Americans paying absolutely no tax, no federal tax. I mean, everybody’s living high on the hog here. And Alexander Ocasio-Cortez and Rashida Talib and, Ilhan Omar and Corey Bush and Bernie Sanders want to make sure that that somehow continues forever.

And then, you’ve got Joe Biden. He’s trying to placate them. Well, he’s got one big giant mess.

Trish: Border Math Doesn’t Add Up in Del Rio, Texas

And there’s going to be no placating because, listen, this crisis right now on the border, it’s tragic. It’s awful. I feel terrible for the people in Del Rio, Texas, that are having to deal with all of this. I, I feel terrible seeing such a human tragedy. But from a political perspective, I mean, Joe Biden is going from bad to worse.

I mean, Afghanistan was a total disaster. I actually I was really affected by that emotionally. I’ll tell you, you know, I’ve been in this business while and I’ve seen a lot and I’ve covered the aftermath of Hurricane Katrina. I’ve seen extreme poverty all over the world. I’ve been in a lot of weird places. I have never been so affected as I was by those images. And then, of course, the horror that we saw with that suicide attack, I mean, it was just I didn’t want to think about it. It just it’s depressing to see what failure was playing out in real time on the world stage. And I’m sorry, but any three year old could have told you you leave the military until everybody’s actually out. I mean, it was just unbelievably bad from every direction.

And then it’s like a one two punch that happens. We go right into this Haitian, Del Rio, Texas, border disaster. And no matter which way you slice it, the president is not coming out ahead here because his own party is furious that he’s not taking more people in.

I mean, Ilhan Omar says it’s because of systemic racism and that we need to bring everybody from Haiti into this country. And then Chuck Schumer is saying that he should just ignore the Supreme Court’s law that says you got to stay in Mexico. I mean, this is this is crazy stuff. And he’s not going to win because then you have independents that are like, well, this doesn’t make any sense. I mean, why are we just having all these people flow by the thousands? And when you do the math and I realize not a lot of people in Washington, D.C. can actually do math, but when you add this up, well, the numbers just don’t add up. The administration saying, “well, we’ve sent about a thousand back to Haiti” and we were told that there were originally fifteen thousand in the camp there. Now, Governor Abbott says there’s around eight thousand. So I don’t know. You tell me, where did everybody else go? I mean, we need to know what’s really going on.

And so I think independents are asking the proper question here, what is going on? And you have conservatives that still want the wall, right? So increasingly now the country is just turning against him. Whether you’re someone who believes we should welcome every Haitian or whether you’re someone who believes you want a border or whether you’re somebody who just believes this is insane and we shouldn’t be dealing with this. We are a country after all.

Well, Joe Biden, you get blamed and while he may try to punt to Kamala Harris, he is the president of the United States. The buck does stop with him and he can’t turn around and blame Trump for this one. Trump, who, by the way, is now more popular than President Biden.

Buyer’s Remorse? Trump Tops Biden In Poll

There was a poll that just came out yesterday, Rasmussen, which came out on the heels of the Gallup poll. And I said when I saw Gallup and I saw that the approval rating was so close, they said, you know what, I better you give it a few more days and this thing is going to flip. And then sure enough, Rasmussen comes out and it shows the popularity to Biden versus Trump is actually in Trump’s favor.

I mean, people are like having ‘buyer’s remorse.’

This is why you’ve got to vote policy, I realize that he’s had some mean tweets and he says some things maybe he shouldn’t and he’s a little too frank sometimes with the media. But  ultimately, as Americans, we need to care about the policies, international policy and economic policy, because that is what really is going to be the biggest predictor of our success and our safety.

Trish: Fed Leaves Markets In Treacherous Spot As Investors Become More Addicted to Liquidity

And right now, we’re kind of in a in a tricky spot. I realize that the market was very relieved. That the Federal Reserve will theoretically continue to be there, of course, until it’s not, but they don’t want to convey that just yet, they’re letting the market kind of hang on. They’re letting investors think, OK, well, maybe this is going to happen. It’s like a little kid, right, who says, “can I stay up and watch the TV show?” And the parent says, “maybe.” And the kid goes, “yay!”

How many times is that? If you’re a parent, you know exactly what I’m talking about and you’re like, “wait. But I didn’t say yes.” But the kid interprets that as a “Yes.”

And, that’s like the market with the Federal Reserve, the market is saying, “yay!” because the Fed just didn’t tell us exactly exactly when they were going to begin the taper and they didn’t tell us exactly by how much. But why should they [the Fed]?

I mean, I’ve said all along, like, let’s let’s keep a little romance, right? Let’s have a little mystery. I think instead what they did was they just continued to let investors think that they would be there and maybe they will.

I mean, look, they’ve been there for quite a while thus far. That comes with all kinds of other complications, which I want to get to. But first, I want to tell you what you need to do in this environment, because if we get the inflation that I think we’re going to get and look, I’ve been spot on on this. I’ve been telling you since last summer, inflation is coming. Sure enough, we got a ton of it right now. And I suspect it’s going to get far worse. Look how often the prices go down. They don’t usually they go up, right?

I was at my local restaurant the other night and they used to offer a free appetizer. Well, that’s no more, right? The entree prices have gone up and there’s no more free appetizer. I mean, look, once they change the menus, it’s very rare that they change them back. Gas prices can fluctuate. Sure. Even home prices, we’ve seen fluctuation there. But in general, in general, once things start to go up, it’s very hard to have them go down.

Same thing with wages, right? Once they go up, it’s hard to have them go down. I’d be happy to see wages go up. They are going up a little bit, but they’re not going up enough, not enough to keep up with inflation.

So you need to think about this in terms of your own planning and your own eventual retirement, which I hope is one day going to come. You shouldn’t have to work for the rest of your life. But if we have this much inflation, hey, you may you may have to worry about  a cup of coffee suddenly costing you 36 bucks instead of five at Starbucks. Well, then, you’re dealing with a different scenario! And I say this, and we kind of laugh. Yeah, I can’t imagine. Thirty six dollars coffee.

But keep in mind, the purchasing power of the US dollar today is worth 15 percent what it was in nineteen seventy two. So I want to make sure you’re prepared for that. I want to make sure that you are thinking about inflation within your portfolio and there’s a lot of different ways to do that. One is just being invested in stock market assets, equities to begin with. But there’s another way to kind of hedge it out that I like…because I look at my equity investments as being risky. Because, gosh, what if this bubble ever bursts and investors wake up one day and they say, “gee, these valuations are way out of whack and we’re not getting the earnings, we thought and then we get into kind of a freefall?” and I want to be able to sleep at night. So that’s when I want to make sure that my portfolio is balanced and diversified. And I do that with gold.


But, back to the market right now. I think that a lot of people were getting really nervous ahead of this Fed meeting. I mean, you saw it right on Monday when the bottom fell out from under.

And that was actually that was the time to get in. I wrote a column and I said to people, “look, you really need to be able to cut through the noise. There’s so much noise out there and there’s so much in the way of distractions that can kind of confuse you as an investor and scare you. And you need to think about what’s real, what’s not what what is the hyperbole, what’s actually going on.”

I don’t like the the threat of higher taxes. I think that that if it were to go through, would be disastrous for our markets because, hey, that money is going to come from somewhere. And that means that corporations are making less money and therefore their valuations will go down because they’re paying more in tax, that they’re just going to relocate to Ireland like they did during the Obama years.

I mean, Trump brought all that money back on shore. That was just a brilliant, brilliant thing to do. He incentivized all these American companies to come back to America, to build here and to bring their capital with them. Now we’re giving them every incentive to go away and we’re giving them every incentive to not want to be here doing business. Unfortunately.

You look at what our our corporate tax rate is going to be, and it’s higher than China’s? It’s higher than Sweden’s? It’s higher than Russia’s? So why is Joe Biden doing that?

I realize he’s trying to pay for all his handouts. But, you’ve got to think about what your economy can actually sustain, what it can actually handle.

The One Thing That Could Ruin The Market Now

And this market is looking good. What’s the one thing that could ruin it all? Joe Biden’s higher taxes, hopefully none of it goes through, I mean, he doesn’t he doesn’t quite seem to have the support that he needs in part, thanks fortunately to Senator Joe Manchin, who is just a hero right now because he’s willing to stand up to these people.

But this is why ’22 is so important and people need to think about what matters to them a little less on the I get it. You know, people were they didn’t like his personality or a lot of people, a lot of suburban women…Who really didn’t like his personality. But do we like this? Do we like this seeing people hanging from planes, seeing our our our military? Service members be blown up in Afghanistan? We don’t like that.

Do we like seeing what we’re seeing right now at the border? Absolutely not.

So this is why I keep saying you’ve got to vote for the policies that are going to matter to you and to your family and to future generations.

A quick reminder, please make sure that you are subscribe to this podcast. You were subscribe to my newsletter, Trish Intel dot com. Do not let them silence us. We have a lot to say, and it’s very important that it be heard. Thank you again for tuning in and I will see you right back here on Monday.

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