Powerful Congressmen Have Powerful Conflicts of Interest

Right now, the issue of corporate tax inversions—where a US company reincorporates abroad to dodge US taxes—is one of the most controversial tax policy questions in Washington. Some Congressmen are very bia$ed on the issue!

Bloomberg surveyed public documents about the investments of Congresspersons and found that two top Congressional leaders—orange human John Boehner, the Speaker of the House, and Dave Camp, the chairman of the Ways and Means committee, both recently sold "between $15,000 and $50,000" worth of shares in Covidien, a company that is a prototype of the problem of corporate tax inversions. From Bloomberg:

The two lawmakers reported the sale of stock in Covidien Plc within nine days of Medtronic Inc. saying it was planning a takeover, an announcement that sent Dublin-based Covidien's shares near a 52-week high. The deal, one of several that have sparked a national debate over U.S. corporate tax policy, would put the combined company's headquarters in Ireland and reduce its tax rate.

These politicians have investment advisers who handle their trading, which ostensibly means that they are free from being swayed by the large profits that are being reaped by their advisers as a direct result of tax policies which are currently being debated in the house of Congress in which they serve. Democrats are proposing measures to rein in corporate inversions— measures which would directly impact John Boehner's investments, in a negative way. This, supposedly, does not matter. The investments of our representatives, as long as they do not directly control them, are allegedly inconsequential to the fair functioning of our democracy.

If investments are so inconsequential that they do not produce a conflict of interest even in cases like this where there is a clear conflict of interest, fine— make everyone elected to Congress put all their investments into a simple index fund portfolio for the duration of their time in office. No special stock picking. Since it's not consequential, they shouldn't mind.

If investments are, in fact, consequential enough to cause conflicts of interest with powerful members of Congress— then they shouldn't have special investments, or stock pickers. Put em all in the simple index funds. Congress is too important to be marred by financial conflicts of interest.

It is dumb that we have to countenance an actual debate with our public servants over how rich they should be allowed to get while not serving the people.

[Photo: AP]