Law professors Bruce Ackerman and Ian Ayres want Obama to call for a ban on campaign contributions by anyone who pays capital-gains rates on carried interest. They also, in a bow to the “Buffett rule,” want to “cap donations [from] any person who pays a lower tax rate than the rate of the average worker.” I’d sort of like to see the court cases that would result if these ideas ever became law.
The recent announcement by Representative Dave Camp (R., Mich.) that he won’t run for reelection plays an important role in their argument.
To defend their right to pay lower rates than the average worker, hedge funds have doubled their political contributions from $20 million in 2008 to $40 million in 2012; yet more recently, private equity firms have entered the contribution business in a big way for the first time.
The impact of this rapid expansion in large gifts was recently on display when Republican Dave Camp, chairman of the House Ways and Means Committee, proposed a sweeping tax reform that would have eliminated this, and many other, loopholes that allow the top 1 percent to pay taxes at lower rates than those imposed on the average working family. Within days, threats of campaign retribution had generated widespread opposition in congressional ranks, leading a despairing Camp to announce that, despite his powerful position, he would not seek another term in office.
This stunning defeat of a reigning congressional baron, together with the escalating sums of big money, is more than enough to establish the “appearance of corruption.”
I don’t think this story holds up. First, much of the lobbying opposition wasn’t based on a defense of “loopholes” but on concern about Camp’s proposed bank tax. Second, the authors supply no evidence that the lobbying campaign was what drove Camp not to run again. He was term-limited as chairman, and nobody expected him to be able to guide his tax proposal into law during this Congress. Camp’s despair is convenient for the authors’ argument, but I am not sure it exists. Camp himself recently provided a different gloss on his impending departure from Congress: “Twelve terms is a long time.”