A bill was introduced in the Senate last week that would require publicly traded partnerships deriving income from investment advice and asset management to pay the federal corporate tax rate of up to 35% instead of the current 15%. The measure was submitted by leaders of the Senate Finance Committee, Chairman Max Baucus, a Montana Democrat, and senior Republican Chuck Grassley, of Iowa.
The bill stunned the financial community, coming shortly before Thursday's pricing of Blackstone's initial public offering, which is expected to raise about $4 billion. Blackstone is one of the nation's largest private equity firms.
While Blackstone would get a five-year exemption (since it filed to go public before the bill was introduced), the potential for a tax hike so far hasn't discouraged others from following suit. According to CNBC's Charlie Gasparino, Kohlberg Kravis Roberts has hired Morgan Stanley and Citigroup for a possible IPO later this year.
Impact on Markets
Some in Congress, however, are concerned about the bill’s impact on capital formation.
On Wednesday, the leaders of the Senate Banking Committee asked the Treasury Department and the Securities and Exchange Commission for analysis of the proposed legislation.
Sens. Christopher Dodd and Richard Shelby, the Democratic chairman and senior Republican on the panel, respectively, asked about the bill's "likely impact on the nation's capital markets, including the potential effects on investor protection, capital formation and other relevant issues."