Congress Drops Tax Hike for Private Equity

Superwealthy investors will get to keep tax breaks they now enjoy
By Peter Fearon,  Newser Staff
Posted Oct 9, 2007 12:39 PM CDT
Senate Majority Leader Harry Reid of Nev., takes part in a news conference on Capitol Hill in Washington, Friday, Aug. 3, 2007. (AP Photo/Dennis Cook)   (Associated Press)
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(Newser) – A proposed tax hike on some of America's wealthiest investors isn't likely to happen this year, as Senate Democrats say they're shelving a bill that would have eliminated the special tax rate enjoyed by private-equity managers. Senate Majority Leader Harry Reid says a crowded legislative calendar makes considering the bill—the object of a massive lobbying effort—impossible, the Washington Post reports.

The bill would have doubled the tax rate for private-equity managers, whose profits are taxed at a 15% capital-gains rate, rather than the 35% rate paid on regular income. Given the hundreds of millions many of them earn, it would have raised $6 billion a year in federal revenue, the Post estimates.