Curtain Up! Light the Lights!
We Are Ready to Stage a Big Fight!

Buyout billionaire David Rubenstein, although an avid supporter of the arts, surely won't be attending the latest production by "Close the Loophole" Theater Troupe.

Think of it as off-off-off Broadway, or a play that is all the rage.

Seattle activists, backed by the Service Employees International Union, will stage a street theater production today, Tax Day, to protest tax-law loopholes that allow Rubenstein of the Carlyle Group, Henry Kravis of Kohlberg, Kravis, Roberts & Co., and other buyout titans to make millions but pay a lower rate of federal income tax than average working stiffs.

The loopholes, S.E.I.U. claims, encourage private equity powerhouses to use debt-ridden business models to earn hundreds of millions while paying low tax rates on their huge investment income.

Using publicly available figures, S.E.I.U. estimates that Kravis' creative use of tax loopholes cost taxpayers between $58.6 million and $96 million in 2006.

David A. Lilly, a spokesman for K.K.R., declined comment. Several calls to the Carlyle Group were not returned.

Proponents of private equity investments point out that portfolio companies pay taxes at the 35 percent corporate income tax rate. And fee income is taxed at the highest individual income tax rates. Meanwhile, distributions of "carried interest" — the share of a fund's profits that fund managers claim as compensation for their services — is taxed at the capital gains rate of 15 percent, though the fees are not related to capital at risk.

The "Close that Loophole" Theater Troupe will stage its production in front of Seattle's main post office at 4:30 p.m. Pacific time.

Perhaps the Seattle activists will stage a version of Waiting for Godot, Samuel Beckett's absurdist existentialist play about two men stuck in purgatory, waiting for the end of the world.

After all, Rubenstein, in a speech to investors in January, said that private equity investors "are in the purgatory age," instead of the golden age. "We have to atone for our sins a bit," he said in a speech at the Wharton Private Equity Forum in January.

The S.E.I.U. has frequently blasted the Carlyle Group, calling for better pay and benefits at private firms. Union members recently stormed the firm's offices in Washington, and have disrupted Rubenstein's speeches in Philadelphia and New York.

by Alfonso Serrano F.