STEVE INSKEEP, Host:
David Wessel, deputy Washington bureau chief for the Wall Street Journal, has been thinking about this story. And David, welcome to the program once again.
DAVID WESSEL: Good morning.
INSKEEP: So we're talking about private equity firms. Wealthy investors who pool their money, they go buy a company. The company gets turned around. It gets sold again. That's the normal pattern. But what are these two companies that would be affected by this tax?
WESSEL: All companies, Wall Street companies and others, don't like paying taxes. These companies have found a couple of ways to avoid paying the taxes that other companies pay. One is they want to be treated like partnerships rather than corporations and avoid the corporate profits tax. And that's what Mr. Grassley and Mr. Baucus are trying to do away with in this bill.
INSKEEP: Those are the two senators we were talking about.
WESSEL: The other thing that's in play is these private equity firms have found a way to take some of their income and tax it as capital gains, which is taxed at a much lower rate than the ordinary wage income that most of us make. And that's also in play.
INSKEEP: So these companies are getting a little bit creative and these two lawmakers are looking to close what they see is loopholes.
WESSEL: Blackstone opened their books, everybody could see how much money they were making. Everybody could see that their founder, Steve Schwarzman, is worth $7.5 billion. This made them a very easy target. I think this is the first manifestation of something we're going to see more of, an attempt to rejigger the tax code to address the fact that the people at the top have been doing very, very well in the last decade or two. And the tax system has not reacted accordingly.
INSKEEP: You say the fact that people on the top have been doing very, very well; is it also a fact that people on the top have been doing unfairly well or at the expense of everybody else?
WESSEL: And one way to address it is to use the tax system to make it, as they say, more progressive, that is to take more from the rich and take less from the poor and the middle.
INSKEEP: David Wessel of the Wall Street Journal. Good talking with you.
WESSEL: You're welcome. Transcript provided by NPR, Copyright NPR.
