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ABC's Betsy Stark (subscription required) called it the hottest initial public offering since Google entered the stock market three years ago. "On most summer Fridays the Wall Street money set is more likely to be crowding the Hamptons than the floor of the New York Stock Exchange--but not this Friday." The "ton of buzz" was about the Blackstone Group and Stark showed us the hoopla on the cable business channels. However only ABC caught that fever. Neither NBC nor CBS mentioned it even in passing. Stark explained what Blackstone, a private equity company, does: "It makes money buying companies, tuning them up and selling them for a profit--a very tidy profit."
And then ABC's Jake Tapper explained what makes Blackstone's profits even tidier: the tax rate for most Americans is 25% to 35%; for Blackstone's billionaire owner Stephen Schwarzman it is just 15%. Tapper explained that operators of private equity firms and hedge funds classify their earnings not as income but as investment profits, so they do not pay income tax but the less onerous tax on capital gains. "Congress will soon hold hearings" and members "are being lobbied on behalf of these millionaire and billionaire interests right now, more so than on any other issue." Tapper added that "not one of the Presidential frontrunners, including the Democrats," supports equalizing the tax rates.
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