Thursday, October 25, 2007

Chuck Schumer Worried About Tax Shortfall?

Does anyone else find it ironic that New York Senator Chuck Schumer is worried about tax shortfalls due to declining home values? This is the man who encouraged the Senate to not tax "carried interest" earned by private equity managers as regular income until just recently. The AP reported on Chuck's current concerns:

In a new report released Thursday, the congressional Joint Economic Committee estimated that 2 million subprime mortgages could go into foreclosure over the next 18 months as initially low introductory rates reset at much higher levels. The JEC report said that states will lose $917 million in property tax revenue as housing values are depressed by the wave of foreclosures.

"State by state, the economic costs from the subprime debacle are shockingly high," Sen. Charles Schumer, chairman of the JEC said in a statement. "From New York to California, we are headed for billions in lost wealth, property values and tax revenues." Schumer called on the Bush administration to more more aggressively to help families find ways to avoid going into default on their home loans.

What are the economic costs of letting highly paid private equity managers pay lower taxes than the average citizen? It looks like they'll get another year of preferred treatment. That is if Chuck's bill makes it out of committee. Senator Harry Reid hasn't made it a priority to date. With falling tax revenues elsewhere, the PEU boys may need to step up and pay their fair share.