Hamptons "Residents" Concerned Buyout Billionaire Neighbors Pay Too Much Tax
Members of SHAME visit the home of buyout billionaire Henry Kravis.
August 29, 2007 – Southampton “residents” took to the streets today to demand more tax relief for buyout billionaires, including longtime Southamptonite billionaire Henry R. Kravis, inventor of the leveraged buyout and pioneer of the trillion-dollar private equity buyout industry.
“Hardworking buyout billionaires like Henry Kravis need our continued help to expand their fortunes and buy bigger and better mansions,” said Southampton activist Rob N. Steel. “The market is slumping, and we have to act now if we are going to protect those like Kravis who pioneered the revolutionary concept of buying companies, and making billions by laying off workers and cutting pension and health benefits. Even the magnificent, giant tax loopholes that buyout firms have been enjoying could be at risk! We have to save the billionaires from paying as much tax as everybody else!”
Kohlberg Kravis Roberts & Co. (KKR) along with other leveraged buyout giants such as the Carlyle Group, have made billions of dollars by buying big companies, squeezing out profits (often accomplished with layoffs and cuts in pension and health benefits), and by taking advantage of tax loopholes that allowed them to pay less than half the tax rate of their chauffeurs. But now, as Kravis and Carlyle’s David Rubenstein contemplate taking their companies public and cash in on their mega-deals—their firms are crashing head-first into the credit crunch, as the massive amounts of debt they for their deals is hard to come by.
Faced with the bleak news, and concerned that their neighbor may have to sell one of his many lavish homes or dip into his billion-dollar bank account, the neighbors of Kravis and other buyout executives with homes in the Hamptons have begun a campaign – Southampton Alliance for Monied Estates (SHAME) – to call on Congress to keep the tax breaks enjoyed by buyout billionaires like Kravis and Carlyle’s Rubenstein. The takeover industry’s leveraged buyout model relies on multiple tax dodges that increase the tax burden of working Americans, and undercut vital public services. SHAME will call Wednesday for a takeover tax holiday to relieve buyout billionaires of the property taxes they pay on their Hamptons’ estates. Kravis, for example, pays an estimated $66,000-a-year in property tax his $16 million Southampton compound.