US Senate Banking Committee Chairman Christopher Dodd told reporters yesterday that he wants to hold hearings on proposed legislation that would cause publicly traded partnerships, including listed private equity firms and hedge funds, to be taxed as corporations.
“We’ll schedule some hearings, or a hearing anyway, to examine any implications,” Dodd said, according to Reuters.
The bill was introduced by the Senate Finance Committee’s ranking members, Chuck Grassley and Max Baucus. If passed, the Grassley-Baucus Bill would impose two levels of tax on publicly traded partnerships, instead of one. The bill would apply only to partnerships that receive income from investment advisor and related asset manager services, and would not apply for five years to firms that have been trading (or have applied to trade) on or before the bill’s introduction on June 14.
The House Ways and Means Committee has also announced plans to hold a hearing on the bill. The committee has not yet set a date.
Dodd, a Connecticut democrat, is a candidate for the 2008 presidential election. Some of his competitors for the Democratic ticket, including Hillary Clinton and John Edwards, have said that they believe private equity firms are taxed too lightly. But Dodd has expressed reservation about the proposed bill.
“I am concerned about the potential adverse effects that these proposals would have on capital formation, on job creation and on institutional investors like pension funds and college endowments,” Dodd told reporters on Tuesday, according to Bloomberg.
Like many of the presidential contenders, Dodd has received campaign contributions from private equity firms. MSN Money reported that Dodd has received $726,950 from private equity firms so far, including $349,700 from Connecticut-based SAC Capital Advisors, and $4,600 from SAC Capital’s chief executive Steven Cohen.
The Senate Finance Committee has already held two hearings on a separate bill that would change the raise the taxation of carried interest, currently 15 percent, to equal that of corporate earnings.