At least one industry insider is throwing cold water on rumours Wall Street is threatening to cut off donations to the GOP as a result of a sweeping tax reform proposal released this week by Rep. Dave Camp, the Republican chairman of the House Ways and Means Committee. In a conversation with Business Insider Friday, they said the industry is “realistic” about the fact Camp’s plan lacks the support to get a vote on the House floor.
However, the insider, who wished to remain nameless, confirmed some firms reached out to lawmakers to complain about the proposal, which would raise taxes on financial institutions with more than $US500 billion and close the “carried interest” loophole that allows hedge fund and private equity profits to be taxed at a lower rate. Mainly, the insider thinks Camp’s “rhetoric” is a concern for the industry.
“I don’t know of any threats. I do think that people are upset with the rhetoric that Camp uses and using the tax code to single out a group of people,” the insider said. “I think everyone understands this is a bill that’s not going anywhere. … We’re not stupid. … The industry’s pretty realistic.”
Republican congressional leadership and some Democrats have distanced themselves from the plan, which camp developed with the former Montana Democratic Senator Max Baucus. The insider said they found it implausible Wall Street firms would threaten to cut off donations because of a plan that’s doomed to fail.
“I think Democrats aren’t running to embrace it and leadership’s running away from it, so be a realist about these things, people don’t do these things,” they said of potential threats. “There’s no indication that Boehner or Cantor are supportive of this proposal.”
While Wall Street might not be losing too much sleep over the proposal, the insider said financial firms do want to counter Camp’s assertion there’s an “implicit subsidy” for the financial industry due to the perception banks are “too big to fail” and would be bailed out in the event of another crisis. In the new regulatory environment, they argued the idea of a subsidy is simply incorrect.
“I think that the biggest issue is that, given the amount of capital and other requirements since Dodd-Frank, there’s not a ‘Too Big to Fail’ subsidy and not the subsidy that Camp asserts,” they said.
Whatever concerns Wall Street may have about the proposal, the insider we spoke with insisted the idea lobbyists would not use their financial muscle to threaten an entire party over a plan with so little support and prospects.
“In my mind, those heavy-handed tactics never work,” said the insider. “They backfire, they don’t work.”
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