Carlyle's Rubenstein the subject of tax protest

NEW YORK, Sept 19 Wed Sep 19, 2007 3:31pm EDT

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NEW YORK, Sept 19 (Reuters) - Roughly 25 members and supporters of the Working Families Party gathered outside the Waldorf Astoria here on Wednesday to protest the tax treatment of private equity firms.

The group specifically targeted David Rubenstein, co-founder of the Carlyle Group [CYL.UL], one of the largest private equity firms in the world, who was speaking at a conference inside.

"These firms are getting away with murder," said Dan Cantor, executive director of Working Families, a community and labor-based organization that advocates for the middle and working class.

Private equity firms, which have raised more than $400 billion and done more $700 billion in the last year alone, have their profits taxed at the capital gains rate, or 15 percent.

Lawmakers have proposed various bills that seek to raise taxes on the profits -- known as carried interest -- on private investment funds to 35 percent, the same as the ordinary income tax rate.

Members of the protest briefly entered the conference and hung a banner above the audience before Rubenstein. The message was the same as on the signs and handouts: Why does Carlyle Group founder David Rubenstein pay taxes at a lower rate than a hotel doorman?

When asked about the protest, Rubenstein cracked several jokes as the audience laughed and applauded.

"When history is written and people talk about the great protests," Rubenstein said, mentioning civil disobedience efforts from Gandhi and Martin Luther King, "I don't think that this will be in that category."

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