Senate Declines To Act This Year On Private-Equity Tax Issue

by Mike Godfrey, Tax-News.com, Washington

11 October 2007

Reports have suggested that the US Senate will not take action this year on legislation that would have more than doubled the tax rate on a portion of the earnings of private-equity and hedge-fund managers.

It is thought that the legislation will now be left under review until next year.

Earlier this year, legislation was introduced by Senate Finance Committee Chairman Max Baucus, D-Mont., and Sen. Charles Grassley of Iowa, which would have meant that private-equity firms and hedge funds which opted to go public would face the same 35% corporate-tax rate as other publicly traded investment-management firms.

Speaking to the Marketwatch news service this week, a spokesman for Senate Majority Leader Harry Reid (D-Nev), who made the announcement that the issue was being shelved until next year, explained that:

"Given the difficulty in getting any legislation through the Senate and the little time left this year for moving other issues important to the American public, it is unclear whether there is sufficient time to address the appropriate tax treatment of private equity firms."

Recommended