When Michael Moore looks at a skyscraper, he sees a bloated monument to rich investors. He becomes nauseous and his lunch floats back up into his throat as he imagines the tenants who can afford Class A rent: Tenants like a semi-retired banker and his entrepreneurial son who watch the sun rise from their 92nd floor office suite while their assistant pours cold, crystal-clear water into tall glasses holding cucumber slices.
“Hmmm, how can I knock that tower down and humble those richies?” Moore wonders to himself. “I certainly can’t push it over. I’d have to give up my breakfast of chocolate covered bacon and hit the gym every morning. Way too much work for a big boy like me. … I’ve got it! I’ll ask the President to push for eliminating the carried interest tax break!”
Moore detests buildings that stand as public monuments to capitalism. In fact, he wrapped the New York Stock Exchange building in crime-scene tape for his movie, Capitalism: A Love Story.
Hollywood elites like Moore and his fans at The New York Times imply that legitimate tax incentives for entrepreneurial risk—like the carried interest tax break—are “loopholes.”
The term “loophole” confuses Americans into thinking that wealthy entrepreneurs are cheaters on par with the 5th grade bully who brazenly steals little Ashley’s sandwich out of her hands and takes his first pilfered bite before her astonished eyes.
Rush Limbaugh explained the carried interest tax break on his July 8 talk show:
“Obama … has made this official in 2009 budget documents he’s presented that he wants to get rid of the carried interest tax break for hedge funds, private equity groups, and commercial real estate people. …essentially carried interest is profits for original investors in hedge funds, private equity firms, (and) commercial real estate that is at present taxed at capital gains levels, and they want to convert this to ordinary income, which would move it up to about 35 (percent) and then eventually 39.6 if Obama gets his tax increase wish, which would shut down commercial real estate investment.”
Limbaugh is right. Unlike other investments, commercial real estate cannot easily move overseas. U.S. developers can’t just start developing in India or China overnight. Commercial real estate investment thrives or dies here in America.
Entrepreneurial ventures such as commercial real estate developments are risky. If we want to create jobs, we must incentivize entrepreneurs to take risks.