The Blackstone Group’s planned sale of shares to the public has raised a predictable hue and cry focusing on the likely multi-billion-dollar reward its founders, Steve Schwarzman and Pete Peterson, will walk away with. As I learned last week, when several newspapers tracked me down in the Caribbean to interview me about him, most of the focus is on Schwarzman, owner of the former Rockefeller-Steinberg apartment at 740 Park, likely a result of his assiduous cultivation of a very public profile in recent years. Now, the New York Times and New York Post are both reporting an unintended consequence of Schwarzman’s strenuous show-boating, a move in Congress to levy new taxes on private equity groups and hedge funds, already known as The Blackstone Bill. “Mr. Schwarzman has courted controversy with his audacious displays of wealth — his glowingly chronicled 60th birthday party has been cited — and that may be one reason legislators have taken greater notice of how he and his private equity colleagues operate,” reports the Times. In another article, it points out the damning fact that Blackstone pays only 1.3 percent taxes on its earnings and its partners pay “no more than 15 percent in taxes on most of the money they earn from the firm, compared with the top individual rate of 35 percent.” No wonder I feel so poor. “The legislation, if passed, would hit Blackstone right in the bottom line. Investment bankers estimate the higher tax rate would cut $250 million off profits – billions off the value of the IPO,” writes Terry Keenan in today’s Post. But she also repeats the error so many before her have made, describing Schwarzman’s trophy duplex at 740 Park as a triplex. Typical taxpayers can be forgiven for hoping she hasn’t also inflated the potential benefits to the public of the passage of The Blackstone Bill.
MONDAY MORNING UPDATE: The New York Sun adds its two cents to the debate over how, when and where Schwarzman will start giving back. Tonight, he’s the honored guest at a corporate dinner at the New York Public Library. Though he was less than generous in declining to be interviewed by this author (ditto the writer of the Sun story, for that matter), let’s hope he will find it in his heart to be generous to authors and books in general.