Bill May Force Blackstone To Pay Higher Taxes

Senate legislation would force Blackstone Group LP and Fortress Investment Group LLC to pay taxes as corporations instead of as partnerships beginning in 2012, a move that may threaten Blackstone's initial public offering later this month. The U.S. Senate Finance Committee introduced legislation today to prevent hedge fund and private-equity firms from using a 20-year-old tax provision that allows investors in publicly traded partnerships to pay capital gains taxes of 15% on income distributions. Companies pay a tax rate of as much as 35%. The measure would give New York-based Blackstone and Fortress five years before being required to pay the higher tax rate.