Wall Streeters who manage other

people’s money went to Capitol

Hill yesterday to protect a loop

hole that lets them pay taxes at

lesser rates than regular working stiffs.

But they couldn’t refute the chief argu

ment against such special treatment:

It’s unfair.

And of all people, Chuck Schumer

knows it – even if he’s pretending, as a

matter of political convenience, that he

doesn’t.

New York’s senior senator – a liberal

Democrat – wrote a whole book advis

ing politicians on how to “win back the

middle-class majority.” You can bet the

Baileys, the fictitious middle-income

family in Chuck’s tome, don’t back tax

loopholes for the uber-rich.

Yet that’s precisely what Schumer him

self is doing – by defending a rule that

allows millionaire hedge-fund and pri

vate-equity managers to have much of

their income treated as capital gains, and

thus taxed at a lower rate.

These managers are often paid a per

centage of the profits spawned by the

funds they oversee. Since the profits are

considered capital gains, they’re allowed

to treat their fees that way, too.

Which means tens of millions of dollars

worth of fees can qualify for the 15 per

cent cap-gains tax rate, instead of the 35

percent top income-tax rate.

Saving the fat-cats a fortune.

But let’s be honest: Fees are fees – not

capital gains. Managers are paid for their

services: maximizing returns – on invest

ments that, by the way, mostly don’t even

belong to them.

So why should such earnings count as

capital gains for tax purposes?

Sen. Hillary Clinton had it right: “Our

tax code should be valuing hard work and

helping middle-class and working fami

lies,” she said. “It offends our values as a

nation when an investment manager mak

ing $50 million can pay a lower tax rate

on her earned income than a teacher mak

ing $50,000 pays on her income.”

To say the least.

Clinton is backing efforts, like those

pushed by Rep. Charles Rangel, to level

the field and tax equity-fund fees at the

same rate as all other income.

Schumer opposes such efforts.

He claims he’s worried that such a

change may hurt New York, which has

more than its share of such business.

But there’s a simpler reason: Schumer,

whose top job is to raise money for Dem

ocrats, doesn’t want to anger the private-

equity and hedge-fund industries –

which are donating generously to Dems.

In June alone, Schumer collected $1 mil

lion from those industries on behalf of the

Democratic Senatorial Campaign Com

mittee. The committee pocketed another

mil over a few months just before that.

Overall, the securities and investment

sector – sensing the shift in Congress –

switched last year from favoring Republi

cans to Democrats: More than $34 million

(53 percent) of its $65 million in gifts

went to Dems in ’06.

So don’t be surprised if other Demo

crats join Sen. Chuck in shilling for the

fat-cats.

Again, that hardly makes it fair.

Let’s be clear: No one abhors America’s

high taxes – and the economic damage

they do – more than us. They should be

lower.

All of them.

But if cops and construction workers

and bus drivers have to pay the high

rates, so, too, should big-shot Wall Street

types and their ilk.

It may be better, we suppose, to lower

rates for everyone than to raise them for

Wall Street – but, either way, everyone

should pay the same rate.

It’s the essence of the American way.

And if Chuck Schumer doesn’t get that,

let him talk to the Baileys.