House Escalates Over Senate on Making Private Equity Funds Pay Taxes
June 21, 2007 (LPAC)--House Ways and Means Committee Chairman Charles Rangel told the New York Times that he was going to hold a hearing on the private-equity tax rate after the Congress returns from the July 4th Recess. Chairman Rangel also told the Times that "While the Senate has outlined their own unique approach on these issues, the House is not bound to consider identical legislation--especially as it pertains to the transition rules."
Rangel was referring to the five-year delay in taking effect, of the Senate's proposed Baucus-Grassley legislation, which would make private equity managing partners--many of them fabulously rich from income taxed at 15% at most--pay the corporate tax rate of 35%. In addition, the Baucus-Grassley bill would apply only to private-equity funds which have sold stock to the public--so far, only Fortress Capital, and Blackstone Partners
Vermont Democratic Representative Peter Welch has introduced a bill similar to the Baucus-Grassley Senate Finance bill but with one notable exception: It drops the transition clause, and would take effect immediately on becoming law.
Senate Finance Committee Chairman Max Baucus (D-MT) has now said that he is open to shortening the transition period in his bill.