A Webb of Lies to Raise Taxes

Posted: Jun 21, 2007 5:24 PM

Last week, Senators Baucus (MT-D) and Grassley (IA-R) introduced a bill that would increase taxes on publicly traded partnerships. Essentially, the bill was targeted toward one company, the Blackstone Group. It would, in effect, more than double the percentage they pay in taxes on their profits.

Many conservative organizations and pundits spoke out against the bill. Of course, the goal of the bill is to punish a company for making a lot of money (and provide additional revenue to the Federal Government).

Today, Senator Jim Webb (VA-D) introduced a Red Herring into the debate. He is arguing that there are national-security concerns over China’s investment in Blackstone. While this article estimates China’s ownership at 40 percent, China is a non-voting common stock, and, as such, isn’t allowed to own more than 10 percent of stock (according to Blackstone’s rules filed with the SEC).

Webb also says, "Blackstone's holdings include companies that provide software used by the U.S. military and in satellite technology." In reality, Blackstone has no holdings in the defense or satellite industries.

Unfortunately, while Senator Webb’s request to review China’s minimal investment in Blackstone might be a shrewd political move, it may also have negative economic repercussions. For example, it might open the floodgates for possible divestment of Chinese investments in companies such as IBM or Microsoft. Of course, that wouldn't be very good for the U.S. economy.

Update:  The Hill - Dems target Blackstone IPO