Schumer Fights Buyout-Firm Tax Rise by Spreading Pain

Schumer Fights Buyout-Firm Tax Rise by Spreading Pain (Update2)

By Ryan J. Donmoyer and Julianna Goldman
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Charles Schumer, Senator from New York

July 25 (Bloomberg) -- Democratic Senator Charles Schumer of New York is fighting a plan to raise taxes on hedge funds and buyout firms with his own legislative poison pill: a demand that other powerful interests share any pain.

Schumer is expressing concern about plans by lawmakers including Republican Senator Charles Grassley that would more than double taxes on private-equity and hedge-fund firms or their managers. He told the Senate Finance Committee this month that he would agree to the proposals only if taxes were also raised on oil-and-gas, venture-capital and real-estate partnerships.

Schumer may be trying to shield both his Wall Street constituents and his party's electoral war chest, Grassley said. The Democratic Senatorial Campaign Committee, which Schumer heads, received $779,100 from employees of private-equity firms and hedge funds in June, six times their combined total in June 2005, federal filings show. That far exceeds the industry's contributions of about $60,000 to the Republican Senate committee.

``They contribute most of their money to the Democrat party and he wants to protect the income,'' Grassley, the ranking Republican on the Senate Finance Committee, said in an interview. ``It's completely contrary to the position he took in the last election when he was leading the Senate Democratic campaign committee and he talked about the inequity of the tax system.''

Schumer said the industry's donations to the campaign committee haven't influenced his thinking on the issue. ``We are going to try to do the right thing on this, and I am making up my mind on the merits,'' Schumer, 56, said in a July 18 interview.

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