Congress Considers Private-Equity Firms' Taxes Private-equity firms enjoy a very low tax rate on most of their profits. But the House and the Senate are considering legislation that would change how private-equity firms are taxed. A proposed Senate bill would raise the tax rate on firms go public to 35 percent from 15 percent.
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Congress Considers Private-Equity Firms' Taxes

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Congress Considers Private-Equity Firms' Taxes

Congress Considers Private-Equity Firms' Taxes

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And as we reported, private-equity firms enjoy a low tax rate on most of their profits. That'd drawn the attention of the tax-writing committees on Capitol Hill.

Now, as NPR's Jack Speer reports, Congress may up the taxes for private-equity groups like Blackstone.

JACK SPEER: The chairman of the Senate Finance Committee, Democrat Max Baucus, opened yesterday's hearing with a quote from President Theodore Roosevelt.

Senator MAX BAUCUS (Democrat, Montana): The man of great wealth owes a peculiar obligation to the state because he derives special advantages from the existence of government.

SPEER: A proposed Senate bill would more than double the tax rate on private-equity firms that go public from the current 15 percent rate to 35 percent. A recently introduced House bill would apply to all private-equity and hedge funds. The magazine publisher Steve Forbes said recently these proposals might be driven by envy over the sky-high salaries of some of the executives. That drew a sharp response from the ranking Republican on the committee, Senator Charles Grassley.

Senator CHARLES GRASSLEY (Republican, Iowa): I direct Mr. Forbes and other critics to cool it. This is a bipartisan finance committee process that has not reached conclusions and hence that's what this hearing is all about.

SPEER: The Bush administration used the hearing to warn that going after private-equity could hurt entrepreneurship and the U.S. economy.

Jack Speer, NPR News, Washington.

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