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Tax to Offset AMT Patch Appears Unlikely
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"There's been a gigantic effort on the part of Wall Street to lobby this issue; they've hired every Tom, Dick and Harry, and they've put on every former Grassley staffer they could," Grassley said. "It has had an impact."
Wall Street lobbying has "contributed to the difficulty of getting offsets," McCrery added.
Spending in Washington by private-equity firms and hedge funds has increased substantially. The nonpartisan Center for Responsive Politics reported that hedge funds and investment firms donated $11.7 million to federal candidates and party committees in the first nine months of this year. That is $1.6 million more than they contributed in all of 2005 and 2006.
Their lobbying expenditures also zoomed. The firms spent $8 million on registered lobbyists in the first six months of this year, compared with $3.7 million for all of 2006, the center reported.
The effort to raise taxes on managers of private-equity firms began last spring after some of those companies, also known as buyout firms, disclosed that their managers' earnings were in the hundreds of millions of dollars and that their income was taxed at the low capital gains rate of 15 percent.
Soon thereafter, senior Democrats in the House proposed to increase that rate to the top ordinary income tax rate of 35 percent. That increase is part of the AMT patch passed by the House, but it has not been proposed in the Senate.
So far, at least, Rangel has remained firm against approving an AMT patch without an offset. "From the House point of view, that's unacceptable," he said.
Staff writer Jonathan Weisman contributed to this report.
