Valerie Jarrett profited from tax loophole She and Obama rail against
For Valerie Jarrett, following President Obama’s lead as “point man” for repealing the carried interest loophole (which allows certain non-cap gain income to be taxed at capital gains rates), made good politics. But her personal wealth, it was good thing that the effort didn’t succeed. The venerable Better Government Association of Chicago exposes the rank hypocrisy, if not worse, of Jarrett’s double approach to issue. Chuck Neubauer and Sandy Bergo write:
The loophole was applied to Jarrett’s earnings from a 2013 Chicago real estate deal involving a $160 million luxury apartment high-rise – earnings that topped $1 million and came while she was working for the White House as a senior advisor to the president, according to records and interviews.
The term "carried interest" refers to money paid to wealthy investment managers that is taxed at the capital gains rate of 20 percent, about half the 39.6 percent maximum rate applied to salaried income. Since his first presidential campaign, Obama has proposed taxing carried interest income at the higher rates.
The BGA estimates the loophole saved Jarrett $200,00 or more. As far as anyone knows, she has voluntarily paid the higher income tax rate on the gain, so as to make her actions follow the course of action she claimed was fair.
But, there is something even worse, the small mater of conflict-of-interest laws.
Federal law prohibits executive branch employees from playing a substantial role in official matters that would have a direct impact on their financial interests. Employees are required to remedy conflicts of interest by asking to be recused, requesting a waiver or selling assets.
Other federal appointees have been forced to divest themselves of assets that could cause a conflict. White House lawyers who reviewed Jarrett’s finances allowed her to keep her interest in the development project that brought her the tax perk, according to records and interviews. There is no record of a White House waiver allowing Jarrett to work on the issue.
Starting in 2010, Jarrett, as the president’s liaison to the business community, was called on to discuss the Administration’s proposal to eliminate the carried interest loophole at three meetings held by the Real Estate Roundtable, a group of top industry executives. She listened to complaints that the changes Obama wants would hurt the real estate industry, according to the Real Estate Roundtable newsletter.
Jarrett also met separately with angry hedge fund executives, according to a March 2012 article in the New Republic.
She also went on the talk show circuit promoting the cause, appearing on MSNBC, Bloomberg TV and NPR in 2011 and 2012.
"This is about fairness. It’s about equity," Jarrett told Michel Martin of NPR. "Things have gotten out of kilter."
So Jarrett worked on a matter in which she had a strong personal financial stake, which seems to violate federal law. It was in her interest that the effort to close the loophole fail And – surprise! – it did fail.
Does anyone expect the Justice Department to investigate? That sort of scrutiny is only for the president’s enemies.
Ht tip: Peter von Buol