Financier flirts with patriotism

Blackstone CEO Steve Schwarzman says he'd share the pain ... but would he welcome higher taxes?


Peter Finocchiaro
September 15, 2011 2:15AM (UTC)

This article is part of the Patriotic Billionaire Challenge, an ongoing project that tracks whether America's billionaires would be willing to accept higher taxes in order to reduce the federal deficit.

Steve Schwarzman, chairman and CEO the Blackstone Group, a private-equity behemoth, made waves this week with a Financial Times Op-Ed that, on the surface, drew parallels to Warren Buffett's August tax-hike manifesto, "Stop Coddling the Super-Rich." We decided to take a closer look at the Schwarzman piece to see if we could glean his position on the Challenge.

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Though the essay is titled "An Olive Branch to Obama: I Will Share the Pain," Schwarzman actually skirts the issue of his own tax burden. He does argue for "shared sacrifice," but also says eliminating the deficit cannot be achieved by "just raising taxes on the wealthiest two per cent." (It's worth noting that these two points, taken together, bear some resemblance to the cries of critics who believe the bottom 50 percent of income earners don't pay their fair share of taxes.) And, as far as prescribing actual policy, the only solution the Blackstone CEO suggests is a flat rate -- which happens to have the flavor of a regressive tax plan.

Schwarzman has long been a vocal critic of President Obama. At one point he even compared the administration's plan to increase taxes on private-equity firms, such as Blackstone, with Hitler's invasion of Poland in 1939. The president's Original Sin was a 2008 campaign promise with regards to "carried interest" -- the share of profits a private-equity-fund manager, such as Schwarzman, receives in compensation for his work. Obama proposed taxing those earnings as personal income, rather than capital gains, a move that would shift the applied tax rate upward by 20 percentage points. The plan, of which Schwarzman was critical, bears striking similarities to action proposed by Buffett in his Times column.

While multiple messages for the Blackstone chief went unanswered -- and as such, we don't have a formal answer on the issue of the Challenge -- the body of evidence seems to suggest that Schwarzman would not buy in to Buffett's proposal. Even while the executive invokes "shared sacrifice," he still seems to endorse every option on the table except raising taxes on the wealthiest Americans. So, until we hear something straight from the horse's mouth, we'll file Mr. Schwarzman as a tentative, but likely, "No."


Peter Finocchiaro

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Federal Deficit Patriotic Billionaire Challenge Taxes




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