These Democrats look like Republicans

By A TIMES EDITORIAL
Published October 14, 2007

Senate Democrats are soooooooo busy they won't have time to get to one of the biggest tax issues on their agenda, Senate Majority Leader Harry Reid said the other day. The issue: Making private-equity managers pay at least the same income tax rate as their chauffeurs and other working Americans. It's not clear what has taken up the Democrats' time, but maybe it was meeting with all those lobbyists hired by private-equity firms to protect their tax break.

For example, Stephen Schwarzman, the 40th richest American with a net worth of nearly $8-billion according to Forbes magazine, pays a marginal tax rate of only 15 percent on most of his income from Blackstone Group, where he is chief executive officer. Individuals making as little as $32,000 taxable income pay a higher rate than Schwarzman because private-equity firms such as Blackstone get favorable treatment of their income.

When Blackstone went public earlier this year while keeping its tax advantage, Democrats made noise about ending the disparity. Then private-equity money started flowing to lobbyists and political campaigns. Blackstone alone has spent $3.74-million at its lobbying agency so far this year, one of the largest payments on record over that time period, according to the Washington Post. The private-equity industry also has been generous with its contributions to Democratic presidential candidates, four of whom are currently senators.

Maybe the Senate really is too busy to fix this tax loophole. But without the added revenue from taxing private-equity profits like everyone else's income, there will be no fix for the alternative minimum tax, which is increasingly burdening middle-class families. Senate Democrats have chosen sides, and ended up looking suspiciously like Republicans.

[Last modified October 13, 2007, 20:58:34]