Investment banker Peter Peterson is probably best known for his efforts to warn of the country's long-term fiscal problems. He was one of the founders of the Concord Coalition and has published several books that purport to show how entitlement spending (Social Security and Medicare) will break the budget. This background makes David Cay Johnston's article on the tax tricks of Blackstone Group especially entertaining. Johnston reports on a loophole that will allow the partners in the Blackstone Group to deduct $3.7 billion in depreciated "goodwill" over the next 15 years at the 35 percent tax rate assessed on ordinary income. By contrast, when the partners in the Blackstone Group took their partnership public, they were taxed at the 15 percent capital gains rate. As Johnston points out, this means that the partners will actually get back $200 million more from the government than what they paid in taxes. Oh yes, Peter Peterson is one of the partners in the Blackstone group. He is walking away both with a big haul from his Wall Street deal, plus the frosting from his tax scam. As he has said publicly many times, he doesn't need his Social Security.
--Dean Baker
