Thursday, April 4, 2013

Toomey Weighing Elimination of Carried Interest

Senator Pat Toomey, Kris Toomey, Sandy Marshall and David Marshall at the  PIFA gala

Senator Pat Toomey and his wife, Kris, were the guests of real estate developer David Marshall and his wife Sandy at the Philadelphia International Festival of the Arts (PIFA) gala. Mrs. Marshall was the chairman of last night's gala. Marshall, CEO of Amerimar Realty, is perhaps best known locally for developing the Rittenhouse Hotel.

Toomey said, "When David Marshall invited me, he promised me a spectacular evening. So far, he has delivered."

Not one to shy away from stirring up trouble or forgo an opportunity to score political points, I suggested in the middle of the mayhem of the party to the senator and Marshall that the one tax break for the rich that could be eliminated was carried interest. Carried interest tax benefit allows investment managers to pay the lower capital gains rate on their share of the fund's profits in excess of their personal investment even though they did not have any capital risk for those profits.

To my surprise, Marshall, who manages real estate funds, agreed that this was one tax benefit that should be closed. At the end of the evening, he recounted his conversation with Toomey.

"I told him that I am developer so it would cost me money if it was eliminated. But carried interest does not really incentivize investment," said Marshall, who is a fiscal conservative.

"The senator was surprised at my response," he continued. "He would consider eliminating it, but said that he is concerned that it would be a slippery slope. The Democrats would have to give something in return to get it."

Democrats, if you are listening, there is a chance to end the most desisted tax benefit in the country that benefits the rich. I also wrote this post because it is a fascinating window into how things get done in Washington.

The ninjas that greeted us at the start of the gals

Marshall, who served as chairman of the board of Fox Chase Cancer Center for three and half years, also pushed Toomey on funding for the NIH. It will be interesting to see if deficit hawk Toomey will agree to an increase in NIH funding.

Marshall has long championed NIH funding. He would only agree to hold fundraisers for the late Senator Arlen Specter if he would agree to push Obama on NIH funding.

"After Obama and Specter went to the Super Bowl, Specter called me and said that he did not get the $2 or $3 billion I asked for, but $10 billion," said Marshall.

Marshall is also in favor of means testing for social security. But it would been too much to expect Toomey to talk about two tax increases in one night.

A look inside the PIFA time machine

Mrs. Toomey still lives in Allentown with the couple's three children.

She said, "The oldest is excited about his dad in Washington, but he has only been there a few times. He can only go on the weekends and Pat wants to come home."

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