By: Javi Calderon
Finance Companies Support Romney’s Presidential Bid
In 2010 the Supreme Court made a landmark decision in the case of Citizens United versus the Federal Election Commission. The Supreme Court concluded that under the first amendment it is illegal for the government to restrict companies and corporations from using company money to express political leanings. This overruled laws passed in 1947 and 1974.
The change in policy gave rise to a new type of political group, the Super PAC, which can collect contributions and donations as long as they have no tie to the candidates campaign or party.
Former Governor of Massachusetts Mitt Romney has certainly benefited from the new rules as he has watched companies pour over $40 million into the pro-Romney super Pac, Restore our Future, on his behalf. Nearly half of this money has come from the finance industry, including private equity firms, investment banks, hedge funds, and even payday loan lenders.
Romney, a former private equity executive himself, is in favor of lowering the tax rate for corporations and for individuals in the top tax bracket, keeping the capital gains tax at 15%, and most importantly, repealing the Dodd-Frank Act. Not surprisingly, the majority of corporate big wigs agree.
One of the main criticisms of Mitt Romney is that he is disconnected from the common man. His list of followers does little to change this perception; the average contribution to Restore our Future has been over $83,000.
Many of Romney’s colleagues and contributors earn their living off of carried interest, not a normal wage. Carried interest is a percentage of the profits accrued by an investment that goes to the hedge fund manager, stock broker, investment banker, etc. and it is taxed at the same rate as capital gains, 15%.
When Mitt Romney released his 2010 tax returns, many Americans were surprised to see how low his taxes were, primarily due to the low tax rate for capital gains and carried interest. In response, President Obama’s tax plan would treat these forms of income as normal income, raising the tax rate to 25- or even 35%. No wonder the finance industry and their leaders are firmly in Romney’s corner.
Lenders who offer short term loans or non-traditional loans, like payday loans, also support Romney’s goals. These institutions are now being monitored by the Consumer Financial Protections Bureau, which was created as part of the Dodd-Frank financial overhaul bill.
It is certainly understandable for individuals and companies to support political decisions and candidates that preserve their way of life. For finance companies, Romney is surely the candidate who is most interesting in preserving the status quo.