Report: Schwarzman Compared Obama to Hitler

Friday, 20 Aug 2010 10:16 AM

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Likening probable White House-backed tax hikes to Hitler invading Poland, Blackstone Chief Steve Schwarzman says Obama has effectively declared war on Wall Street.

Newsweek reports that Schwarzman was addressing board members of a nonprofit organization when he said, “It’s a war,” referring to Wall Street’s struggle with the administration over increasing taxes on private-equity firms.

“It’s like when Hitler invaded Poland in 1939.”

Neither Blackstone nor the White House would discuss Schwarzman’s statement, which followed this summer’s strong criticism of the administration from the U.S. Chamber of Commerce and the Business Roundtable.

Schwarzman’s initial complaint was about the Obama administration’s proposal to tax “carried interest” — the compensation structure of private-equity-fund managers — as ordinary income at a rate of 35 percent instead of at the capital gains rate of 15 percent.

Strictly speaking, the commissions and fees that hedge-fund managers receive, which usually amount to about 20 percent of their clients’ profits, are not capital gains because the hedge fund managers themselves never hold the stocks.

A move to increase taxes on hedge fund managers who work in New York but live elsewhere has died after it raised the ire of top New York politicians, including Governor David Paterson and Mayor Michael Bloomberg, The Wall Street Journal reports.

Connecticut Governor Jodi Rell used the prospect of higher taxes in New York as part of an ongoing effort to lure hedge funds to her state, handing out a document that showed how the tax change would affect a fund manager who lived in one state but worked in the other.

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