| Page 2 of 2 < |
Senators Cautious On Plan for Equity Tax
|
TOOLBOX
   Resize
COMMENT
 Discussion Policy
 CLOSE
Comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions. You are fully responsible for the content that you post.
Who's Blogging  |
Baucus and Grassley acted first, introducing the bill that deals with publicly traded partnerships like Blackstone. The measure would increase the firms' tax rate over time to 35 percent from the 15 percent capital gains rate it currently pays.
Then, in the House, which originates tax legislation, senior members of the Ways and Means Committee, including Rangel and Rep. Sander M. Levin (D-Mich.), recommended raising the tax rate for managers of all sorts of private-equity firms and not just those that go public.
The spurt of activity spawned a swift reaction from the firms under attack. They retained lobbyists and tax experts in large numbers from the best-connected law firms and consultancies in Washington. In the first six months of this year, private-equity funds dispensed at least $5.5 million for lobbying assistance, according to public records.
The onslaught had an affect. "They are very powerful interests to overcome," Grassley said. "I think they've made some impact."
Still, tax writers have been scrambling to find sources of revenue to offset many costs, especially a proposal to prevent the alternative minimum tax from raising taxes on 23 million households this year. The tax was originally designed to prevent millionaires from using tax breaks to avoid income taxes but has grown to hit upper-middle-income families, as well.
Reining in the AMT for 2007 alone is expected to cost more than $50 billion. The carried-interest tax increase is among a variety of options under consideration in Congress to raise that money.
Grassley said he would "fix" the AMT without trying to find offsetting revenue. But Baucus and Rangel said they were determined to stick as far as they could with new congressional rules that mandate that all tax cuts be paid for.
Another possibility raised by Rangel to generate substantial revenue is to impose a surtax on the highest-income Americans, those who earn more than $250,000 or $300,000 a year. Baucus, however, was not optimistic about that proposal. "It will be difficult for that kind of provision to pass the Senate," he said.
