If you still have any doubt why those two senators want to make a federal case out of how much private equity firms gets taxed, let's compare (courtesy of the NYT) Goldman Sachs, Wall Street's most profitable firm, and the Blackstone Group, the public equity giant that's about to go public.

GOLDMAN SACHS
--2nd quarter profits: $3.4 billion
--Tax bill: $1.1 billion
--% of profits: 32%

BLACKSTONE GROUP
--1st quarter profits: $1.1 billion
--Tax bill: $14 million
--% of profits: 1.3%

Blackstone and the other PE boys get away with that outrageously low tax burden because they're allowed to operate as partnerships, which pay far lower tax rates than corporations.

Traditionally, most partnerships were so much smaller than corporations that the tax advantage did not amount to a particularly large sum. “It makes sense for three guys in a garage making something,” said Victor Fleischer, an associate professor of law at the University of Illinois who met last month with Congressional aides to discuss his research on the tax advantages of private equity firms. “But when you apply those to a $1 billion investment fund, it doesn’t make that much sense.”

The flip side of the argument is that private equity investments - and we're talking billions here - have kept the economy growing at a decent clip, despite the sour real estate market. In addition, their investments in publicly traded companies have helped fuel the current Wall Street rally, so regular folks who can't afford $100 million estates should be thankful for having the chance to make money they'll have to pay taxes on. Sounds a little on the feudalistic side. Just pay the tax bill, folks - you can afford it.