Saturday, June 16, 2007

Progressive Taxation is in the Wind

Via the Economist, yesterday:

In Britain several parliamentarians have grumbled after Nicholas Ferguson, a leading figure in British private equity, recently admitted that partners in buy-out firms get away with paying less tax than office cleaners.
The editors discuss the same legislation (introduced Thursday) as that covered in this WSJ article.
The fuse to Thursday's bomb was apparently lit back in February shortly after Democrats took control of Congress. That's when Fortress launched its public offering, stirring heavy press coverage of big payouts -- and drawing more scrutiny from the new leaders on Capitol Hill, who came in hungry to find new revenues to pay for new spending plans.

Senate Finance aides started researching more an issue that had, until then, been largely unfamiliar to them, and stumbled on some scathing accounts in the tax trade press about the advantages of the Fortress deal.
The Economist editors continue:
Sceptics might suggest that the senators [Baucus and Grassley, who introduced the legislation] are merely the agents of the bispartisan politics of envy [or resentment?]. Yet the electorate has much to envy. The public has not warmed to Steve Schwarzman, Blackstone’s co-founder. His 60th birthday bash attracted much press attention for featuring a set by Rod Stewart for which he was reputedly paid $1m. That lapse of taste brought greater scrutiny of his wealth. He is expected to sell stock worth as much as $677m, leaving him a 24% stake valued at almost $8 billion, unless the senators get their way. When Blackstone's shares start trading, perhaps later this month, he should trump Rupert Murdoch and Steve Jobs on rich lists. Last year alone he earned $398m, almost double the combined pay of the bosses of Wall Street's five largest investment banks.
Well, when you work twice as hard and create twice as much value in the economy as the leaders of Wall Street's five largest investment banks combined, you ought to get a tax break. Sheesh. I mean, how much value are those office cleaners creating? And how hard are they really working? Those offices practically clean themselves.

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