Here are the details of what Hillary is proposing to do to reform Wall Street. It may not seem like enough to those who are clamoring to bring back Glass-Steagall, but it will undoubtedly help middle-class workers.
It might also, in the end, do more to reverse the current business climate in which bottom lines and profits are more important than employees.
It's all about increasing the capital-gains rate on short-term profits--the kind that are made by investors--and incentivizing long-term investments. It's complicated but worth a read:
In part, it is a strategy of necessity. Clinton will never go far enough left to satisfy the hardcore Elizabeth Warren wing of the Democratic Party, the thinking in her camp goes. But she can lay out a fresh set of policies addressing “quarterly capitalism” — a phrase coined by McKinsey & Co.’s Dominic Barton — that will open a fresh chapter in the debate about why incomes aren’t rising for average workers. Clinton began the process with proposals on employee profit-sharing and will continue it on Friday.
“This debate really isn’t from a left-wing, right-wing prospective,” said Neera Tanden, president of the Center for American Progress and an informal Clinton adviser who has written with investment banker Blair Effron of the need to shift corporate thinking to long-term investment. “CEOs, many of whom are card-carrying Republicans, like this kind of incentive structure.”
Clinton will propose that investors who sell shares within a year continue to pay the ordinary income rate, which runs as high as 39.6 percent. But she will propose changing current law which allows investors who hold stocks for as little as a year and one day to pay the capital gains rate, which only rises as high as 23.8 percent for the highest income bracket. Clinton advisers would not comment on exactly what top rate Clinton would propose or how long investors would need to hold shares to qualify for the lowest capital gains rate.
The idea behind the changes is to reduce pressure on executives to maximize shareholder value in the short-term by doing things like buying back stock and paying large dividends. This would theoretically free them to use their vast cash reserves to invest in new plants, equipment and employees. One of the biggest problems facing the U.S. economy right now — cited by analysts on both the left and the right — is the unwillingness of corporate America to make long-term investments.
POLITICO: Hillary Clinton’s Wall Street hedge She will call for tax hike on short-term gains
Updated On: 7/24/15 at 10:30 AM
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