Billionaire private equity tycoon Stephen A. Schwarzman, the CEO of The Blackstone Group (BX), recently made a case for why villanizing the ultra-wealthy is short-sighted.
As rivals for the 2020 Democratic nomination squared off on stage Tuesday night, it put their policy dispositions on full display. Senators Bernie Sanders of Vermont and Elizabeth Warren of Massachusetts are among those pushing for a wealth tax on the wealthiest Americans — with Sanders recently raising eyebrows by arguing that "billionaires should not exist.”
However, Schwarzman argues that a wealth tax is a terrible idea. At Yahoo Finance’s All Markets Summit in New York last week, the wealthy investor said those policies would result in an exodus of businesses from the U.S., and deter future entrepreneurs from starting new ventures of their own.
Billionaires “...didn't become prosperous sitting and just watching television. These are people who started businesses. And every place where everybody works was started by somebody,” Schwarzman said. “And, that's the way the world works.”
He explained that many billionaire success stories created companies that hired anywhere from hundreds to thousands of people, providing them with income and opportunity.
“That's where people work. And those people make more money. And what happens is they become affluent,” he said, adding that company founders took on considerable risks which don’t always pan out.
“Most of them fail, by the way. Nine out of 10 businesses that are started result in failure,” he said. “So if you're one of the people who make it through that, you're providing employment and prosperity, and, in effect, tax revenue. And you have a bunch compared to other people.”
Schwarzman, 72, built The Blackstone Group from an upstart advisory shop that could barely raise any capital to a global behemoth with $545 billion in assets. Through its portfolio companies, Blackstone employs around half a million people. The CEO is listed as the 100th richest person in the world, and has an estimated fortune of $18.4 billion, according to Forbes.
Julia La Roche is a finance reporter at Yahoo Finance. Follow her on Twitter.