Billionaire Goldman Sachs alum Robert F Smith made headlines when he donated enough cash to pay off the student loan debt of the entire Class of 2019 at Morehouse College; but Smith is also an ardent supporter of the carried interest tax loophole, which allows the richest people in America to pay little to no tax on the bulk of their earnings, while working Americans (like the Morehouse Class of 2019 will be, shortly) pay their fair share.
If people like Smith were taxed at a rate comparable to the little people, there would be ample funds for free universal post-secondary education. Merely closing the carried interest loophole would generate enough tax revenues to pay off the student debt of 450 Morehouse Classes of 2019.
Anand Giridharadas's latest book, Winners Take All, is a scorching critique of the way that gifts like Smith's are used to diffuse the political energy for real tax justice. In an excellent Twitter thread about Smith's gift, Giridharadas writes, "Generosity is great. But it‘s not a substitute for justice. Gifts like today’s distract us from what is really going on in our economy, and it can cover up the way in which the giver is fighting on both sides of a war. If plutes paid fair taxes, this gift might be unnecessary."
Elizabeth Warren has proposed debt forgiveness for all student loans and free tuition at all state colleges.
Despite his egalitarian streak, Mr. Smith is also every bit a private equity chieftain. He opposes increasing taxes on carried interest — the profits from private equity investments — and he believes the best way to lift up the poor is to create jobs.
A Private Equity Titan With a Narrow Focus and Broad Aims [David Gelles/New York Times]
(via Late Stage Capitalism)
(Image: Donkey Hotey, CC-BY)