Legislation addressing the so-called “carried interest loophole” is gaining momentum in Illinois after the release of data finding the measure would generate $473 million for the cash-starved state.
Grassroots Collaborative, a coalition of labor unions and human service organizations, April 19 touted passage of a new privilege tax on private equity firms, hedge funds and other financial organizations with the release of “ Illinois Billionaires and Their Lucrative Loophole.” The report, released in conjunction with Hedge Clippers, a similar coalition, blasts a small group of wealthy investment managers for failing to pay their fair share of state taxes. The report calls on the Illinois General Assembly to close the loophole and fund state programs hampered by a budget crisis that has dragged on for almost two years.
“Illinois’s private equity and hedge funds are conservatively estimated to be earning $4.8 billion per year in under-taxed carried interest,” the report concludes. “A state bill to recapture this revenue at the ordinary income level has strong sponsorship in both houses of the state legislature, and it would raise at least $473 million each year for schools, health care and essential public services in Illinois.”
But community organizer Amisha Patel said Obama too often tried to walk a fine line on such issues.
“I think the president was afraid to be clear on an urban agenda. I don’t think he thought he had room to move on that, and so you get a really hands-off approach, these half-solutions,” Patel said. “There was tremendous pressure on Obama, being the first black president of this country, and I think he was focused on being seen as the president for everybody in the country, and so he moved away from urban issues.”
Patel applauded Obama’s success with Obamacare and noted the great pride many Chicagoans feel in him, but said the high expectations many locals had when Obama took office because of his background and understanding of city problems were met with disappointment.
“When he campaigned in 2008, he campaigned as a community organizer, but he didn’t govern as one,” she said. “I think that’s a missed opportunity.”
CITY HALL — Mayor Rahm Emanuel had been expected to talk about the role of parenting in preventing violence in his big speech Thursday, but aldermen and activists cautioned him about the “myth” of the absentee African-American father.
In the end, Emanuel seemed to sidestep the issue in his speech on Thursday, and mentioned the word “parenting” just once.
“We need to strengthen policing, prevention, penalties and parenting,” he said, according to a transcript of his remarks.
In briefly laying out his plans for his speech on Wednesday, Emanuel had the “parenting” issue in terms of addressing “mentorship” programs like My Brother’s Keeper.
“The Vice Lords are ready to be a mentor. Is Chicago ready to be a mentor?” Emanuel said. “We know what the gangs are offering. The question is will there be an alternative for our kids to choose from?”
Ald. Ameya Pawar (47th) challenged the factual basis for the “myth” of the fatherless African-American family.
“I think the mayor should focus on economic policy,” said Amisha Patel, executive director of the Grassroots Collaborative. “Blaming fathers and blaming families for crime is really disingenous.”
Yet Ald. Raymond Lopez (15th) defended the idea of attending to families if focused on wider social issues.
“I would like to see us look at ways in which we can actually rebuild the family unit and find ways in which we can get police and families to engage,” Lopez said. “I’d like to hear an announcement about year-round employment for youth, things that keep idle hands busy.”
Lopez said he hopes Emanuel has ideas on “some new corporate partners in Chicago,” and using them to drive economic development, “not just Downtown,” but also in the neighborhoods.
“I lost a brother, sister, an uncle and two cousins to gun violence right here in this neighborhood,” said Rev. Robin Hood, Illinois Anti-Foreclosure Alliance
There is no disagreement. The current level of gun violence in the city of Chicago is unacceptable.
“Kids don’t jump rope together anymore. You don’t play hopscotch because you’re afraid you may be shot by a stray bullet,” said Principal Sherryl Moore-Ollie, William Penn Elementary School.
Principal Moore-Ollie was just one of the North Lawndale neighborhood’s many community leaders that came together to discuss how to put a stop to the downward spiral being experienced by people here. Housing, job creation, education are all elements needed to curb the violence.
“I’ve been a part of Mothers Opposed to Violence for years and we’re still fighting,” said Gloria Muldrow, a crime victim.
Elsewhere in Chicago, similar discussions were being had. Proposing a somewhat unorthodox solution, longtime violence interrupter Tio Hardiman called on the state to resume its funding of Ceasefire, and suggests employing some of the same people currently responsible for perpetrating violent crimes in the city to stop them from happening.
“You need strong individuals that know these young brothers for real that can get into their ear at different times. And you have to hang out with them at times because you have to be there,” Hardiman said.
Meanwhile, in Douglas Park, a group of several dozen people came together for a mock funeral procession in Douglas Park. Their purpose? To call on the mayor and governor to better fund violence-wracked neighborhoods.
“Giving these young men help, sending them back to school, opportunities when they get out of jail, set up a work program, so that they can get back in school. It would be a lot better,” said Clarise Evans, a certified nurse assistant.
Adding yet another blow to the moribund finances of Illinois, two major credit rating bureaus, Moody’s and Standard and Poor’s, last week gave the midwestern state another financial downturn; this time to just two levels above junk status, in view of the continued lack of a budget and the growing gulf between Republican Gov. Bruce Rauner and the Democratic majority legislature, said bureau officials.
Citing political gridlock as the reason the change, from from level to Baa2, this action also affects the bond issuance of $2.75 billion in revenue bonds and helps to increase a bill backlog of over $10 billion, according to the Chicago Sun TImes.” It also noted that prior to the Rauner administration, Illinois had the worst credit rating of any state, a fact that may have become lost in the recent donnybrook between the governor and the state legislature.
The change from Moody’s was from a “lowered Illinois’ rating on $26 billion in debt by one level to Baa2. That downgrade affects $2.75 billion in revenue bonds,” and for S&P it “downgraded the state’s general obligation bonds to BBB+ from A-.”
On Monday, the Illinois House Revenue and Finance Committee held a second hearing to address the expenses on interest rate swap deals that have already cost the state of Illinois $684 million, and are tied to financial deals that could cost taxpayers an additional $870 million in November, if the state does not sue or renegotiate these deals as others across the country have done.
An Illinois House committee will hold a second subject matter hearing Monday morning in Chicago on the issue of interest rate swaps.
City of Chicago Treasurer Kurt Summers is among those expected to testify before the House Revenue and Finance Committee.
Last month, Summers urged three Chicago employee pension funds to consider joining class action lawsuits against banks in an effort to recoup losses from swap deals.
“We are asking the question of whether this financial market was ever fair. If we are successful, then all Illinois residents and taxpayers will benefit. We will send a message that this sort of bad behavior will no longer be tolerated by the people of Illinois. We will only accept a fair and level playing field for the investment of public money,” Summers said in a news release distributed by the Grassroots Collaborative. “I call on Governor Rauner to fulfill his fiduciary obligation to protect our finances at their most vulnerable moment by joining the antitrust lawsuit.”
Monday marks the second subject matter hearing the House Revenue and Finance Committee has held on the interest rate swap deals Illinois has struck with big banks. Progress Illinois previously covered the first hearing on the issue, which was held in late April.
According to the Grassroots Collaborative, which has been working to shed light on interest rate swaps, the controversial financial deals “have already cost the state of Illinois $684 million” and “could cost taxpayers an additional $870 million in November if the state does not sue or renegotiate these deals as others across the country have done.”
Read Progress Illinois’ past reporting on how interest rate swaps work and their financial impact on the state, city of Chicago and Chicago Public Schools system.
Chicago, IL 60605
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