NCPA - National Center for Policy Analysis


April 7, 2009

Larry Summers, the White House economic guru, is taking some hits from the left after his official disclosure forms revealed late last week that he got rich thanks to the financial industry he is now charged with reviving and reregulating, says the Wall Street Journal.

For example:

  • The appearance-of-a-conflict-of-interest crowd isn't happy that Summers earned $5.2 million last year working for the beneficent hedge fund, D. E. Shaw & Co.
  • He also made a bundle in speaking fees, including $135,000 for a single appearance for Goldman Sachs.

It is worth noting that Summers will pay Bush-era tax rates on his Wall Street windfall profit.  So if the man who would still like to be Federal Reserve Chairman is looking to make a gesture of political solidarity with the middle-class masses, here's an idea: Honor your principles, and pay taxes on that income at Bill Clinton-Barack Obama rates, says the Journal.

Summers could simply calculate his taxes for 2008 based on what he'd pay if President Obama's tax proposals had been law:

  • Thus his top marginal income tax rate would rise from 35 percent to 39.6 percent, plus the phase outs in deductions and exemptions, which would make the rate roughly 41.6 percent.
  • Summers could write a check to the IRS for the difference, and of course he wouldn't forget to deduct any charitable giving at only 28 cents on the dollar, rather than 35 or 41.6 cents.

President Obama likes to say it's the "era of responsibility," and if that's true then Summers should lead by example, says the Journal.

Source: Editorial, "An Idea for Mr. Summers: He could pay higher taxes—if he thought that was right," Wall Street Journal, April 7, 2009.

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