Hillary Clinton Offers Plans for Changes on Wall Street
Hillary Rodham Clinton made a case on Friday for weaning Wall Street from an addiction to profits, calling for a change to the capital gains taxes for the highest earners and a string of measures to adjust the balance of power between corporate titans and their employees.
She also supported raising the minimum wage for fast-food workers to $15 in New York, where a wage board this week suggested such an increase, but she also insisted such a rise is not a one-size-fits-all approach for the whole country.
Amid pressure from the left to take a more aggressive approach toward the financial industry, Mrs. Clinton presented her proposals in a speech at New York University, the second major address of her campaign that focused on economic issues. Her approach — suggesting, among other things, increasing transparency involving stock buybacks and executive compensation — marks the first efforts to take on Wall Street, without the gate-rattling that some more liberal elements of the Democratic Party have called for.
Her plans won praise from a key centrist think tank, but came under criticism from anti-tax groups and some liberal analysts, who were skeptical about how much change would result.
Among the splashiest ideas was a call to overhaul capital gains taxes imposed on those in the highest income bracket, meaning families making more than $465,000 a year, so that people would hold on to stocks for longer, reducing corporate obsession with quarterly profits. That would encourage companies to focus more on investing in long-term growth and their workforces.
The new rate, along a sliding scale over six years of holding an equity, would increase from 20 percent to nearly 40 percent for investments that taxpayers maintain for between one and two years, and would gradually decrease after that, back to 20 percent. The top rate would be the same as the highest tax rate for normal income.
“The current definition of a long-term holding period, just one year, is woefully inadequate,” Mrs. Clinton said in the speech, without mentioning the specifics of the plan. “That may count as long-term for my baby granddaughter, but not for the American economy.”
Mrs. Clinton added that businesses needed “to break free from the tyranny of today’s earnings report so they can do what they do best: innovate, invest and build tomorrow’s prosperity.”
She added, “There is something wrong when senior executives get rich while companies stutter and employees struggle.”
Mrs. Clinton’s proposal for changing capital gains rates for the highest earners is a plan that many of her Wall Street supporters endorse.
But at least some critics on the left raised questions about her overall approach. Len Berman, of the Tax Policy Center, described himself as “skeptical” about whether it would encourage companies to do more to treat workers as assets.
“The purpose seems to be to encourage companies to make longer-term investments,” he said of her plan. “I don’t know that it’ll really accomplish that goal.”
Others praised the plan.
“It was a thoughtful approach to reform that would actually help people, help the middle class, instead of a symbolic thing that might make people feel better but wouldn’t have any impact on people’s lives,” said Matt Bennett, head of the center-left think tank Third Way.
“I think this is a very good-faith effort to find every possible opportunity for government to improve the system, and sometimes that’s going to be marginal, sometimes that’s going to be substantial, but they’re doing their best.”
Mrs. Clinton strongly criticized “quarterly capitalism,” and the focus on generating profits for short-term earnings reports.
“A survey of corporate executives found that more than half would hold off making a successful long-term investment if it meant missing a target in the next quarterly earnings report,” Mrs. Clinton said in the address.
“Large public companies now return eight or nine out of every 10 dollars they earn directly back to shareholders, either in the form of dividends or stock buybacks, which can temporarily boost share prices,” she said. “Last year, the total reached a record $900 billion. That doesn’t leave much money to build a new factory or a research lab, or to train workers, or to give them a raise.”
She cited a report that said that some Standard & Poor’s companies over the last decade had doubled “the share of cash flow they spent on dividends and stock buybacks, they actually cut capital expenditures on things like new plants and equipment.”
Dominic Barton, the global managing director of McKinsey & Company, who coined the term “quarterly capitalism,” praised Mrs. Clinton for focusing on “more long-term capitalism, more investment.” But he did not endorse any of her specific prescriptions, and suggested that caution is important in terms of how changes to buybacks and dividends are addressed.
