NEWSWEEK: There have been a lot of rumblings on Capitol Hill these past few weeks about your bill, as well as carried interest [the share of hedge-fund and private-equity profits that managers receive for their performance]. Why is the political world focusing on these issues now when they’ve been around for a while? Chuck Grassley: I think you have to see it in the context of tax codes that haven’t been changed in a long time and maybe need to be reviewed. … [Today] there is an entire industry of people trying to screw the taxpayer because they can hire lawyers to help them find loopholes. When John Doe in Waterloo, Iowa, goes to see a lawyer, it’s not to get by the tax system, but because he has trouble understanding the tax system.
Did Blackstone’s decision to go public, or reports of [the firm’s CEO] Steve Schwarzman’s lavish lifestyle and huge earnings play a role? No, not at all.
Many Republicans are lined up against your legislation, and that’s expected. But even some Democrats seem to be on the fence. What gives? The vast majority of campaign funds that come from these sorts of carried-interest people go to the Democratic Party. I suppose you are having Democratic members of Congress that are torn between their demagoguery over inequity between rich and poor, and here they have a lot of people who are very wealthy who maybe aren’t doing something that equates with justice but are big contributors to their political cause. … That said, I don’t mind watching them squirm.
What about the criticism that your bill will stymie economic growth and hurt pension funds that invest in private-equity firms? This is about fairness. Here you are, a John Doe worker. You pay your taxes voluntarily. You go to a lawyer because the tax code is complicated. You don’t go to the lawyer to find out how to pay less on your tax bill. You go there to write your check and pay your taxes, as opposed to people who can hire expensive lawyers to see how they can find their way through the tax code and screw the U.S. Treasury.
How do difficult-to-understand issues like carried interest and publicly traded partnerships and their tax codes play back in your home state of Iowa? Someone said to me in a town meeting, how come the marginal tax rate for [Warren] Buffett was 17 percent and he’s a billionaire and all the rest of us are paying this [higher] rate? Or how come you have a separate tax rate for capital gains? But for people to get to that point, news reports of people doing whatever they can, legally or illegally, to find [tax] loopholes, feeds this attitude that I get at the grassroots.
Is there a personal philosophy behind your bill? I heard this story that you used to turn your car engine off when driving into the parking garage on Capitol Hill so as to save gas. It’s true. When I’m driving in New Hartford, Iowa, [the Senator’s hometown] there are two places where I can turn the engine off and coast. One of them is two miles from the farm. For about half a mile I can coast down the hill, before having to drive up again. Then I go another mile to the east edge of my farm and I coast the last quarter of a mile into the farm. I can get the garage door open as I ride and I coast into the garage. When I came to Congress, I had a 1977 Chevette. I had brought it out here and had it until 1989. During that period of time I would go to the [Senate] Hart Office Building and would coast down the ramp into the basement.
Care to share any other cash-saving tricks? If you want to save some money on energy and not give it to the Arabs, do what I do and keep the air conditioning at 80 degrees. If you have a ceiling fan, it makes it another four degrees cooler.
