Sunday, July 29, 2007

Chuck Schumer looking out for Wall Street.

Business: In particular the private equity and hedge fund industries which some Dems are desperate to tax out of existence.

But there is another way Mr. Schumer has been busy with hedge fund and private equity managers, an important part of his constituency in New York. He has been reassuring them that he will resist an effort led by members of his own party to single out the industry with a plan that would more than double the taxes on the enormous profits reaped by its executives.

Mr. Schumer has considerable say on the issue. In addition to being the third-ranking Democrat in the Senate leadership, he is the only Democrat serving on both of the major committees, Banking and Finance, that have jurisdiction in the matter.

He has long been a pro-business Democrat and a fund-raising machine for the party, as well as a vociferous supporter of Wall Street issues in Washington, much the way Michigan lawmakers defend the auto industry and Iowa politicians work on behalf of corn farmers.

In this case Schumer has his head on straight because he understands the implication of trying to kill a cash cow.

Mr. Schumer said in an interview that he was torn between the need to protect an industry vital to his home state and the need to generate revenues to finance government programs. He said a tax increase on private equity and hedge fund executives could lead to an exodus of jobs and companies from New York, and even from the country. He said the plan, if enacted federally, would also lead to an increase in New York State tax that would further bear down on the industry. He said he worried that the industry was being unfairly singled out.

“Unintended consequences often occur when you do major tax work. And you have to be careful,” Mr. Schumer said in the interview, held in his office just off the Senate floor.

On the other hand he has to deal with people like Charles Rangel who doesn't seem to understand much of anything.

But even some of Mr. Schumer’s fellow New York Democrats dispute that notion, including Representative Charles B. Rangel, the chairman of the House Ways and Means Committee, which has jurisdiction over tax matters.

“If the businesses are so fragile that taxing them at an equitable rate will cause them to leave the city, I can’t picture that,” Mr. Rangel said.

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