WASHINGTON — Senators Schumer and Clinton are on the fence over a bill that would force private equity firms and hedge funds to pay higher tax rates if they go public.

The bipartisan proposal, offered last week by the leaders of the Senate Finance Committee, could be prickly for the New York senators, who have pushed for increased fairness in the tax code while also advocating for growth in the financial sector, which has long been crucial to the state’s economy. Opposition to the bill could also put them at odds with the dean of the state’s congressional delegation, Rep. Charles Rangel of Harlem, who has publicly praised the proposal.

The Democratic chairman of the Finance Committee, Senator Baucus of Montana, and its leading Republican, Senator Grassley of Iowa, announced the legislation last week amid public attention to the initial public offering by the Blackstone Group, a New York-based private equity firm. It would change the federal tax code to treat all publicly traded partnerships, which would include Blackstone, as corporations, meaning they would be subject to a 35% federal rate on income. Partnerships that aren’t publicly traded generally pay no corporate income tax; income flows through to the partners, who are taxed on it at whatever rate applies, often the 15% rate on capital gains.

“It’s something we’re just studying,” Mr. Schumer said yesterday at a press conference in New York, where he was asked about the proposal. “We haven’t looked at the proposal.”

Mrs. Clinton also has not yet taken a position on the bill. “Senator Clinton believes there are broad concerns surrounding private equity in relation to the rest of the market that need to be examined and she is evaluating this and other proposals,” a spokesman for her Senate office, Philippe Reines, said. Mrs. Clinton had made ending certain tax breaks for corporations a plank in the economic platform of her presidential campaign.

The bill’s authors have cast the proposal as an effort to clarify the tax law that gives what they say is an unfair advantage to companies that seek to avoid higher rates by making public offerings as partnerships. It would apply to firms that derive their income from investment adviser or asset management services.

Mr. Rangel, who as chairman of the House Ways and Means Committee serves as the de facto Democratic spokesman for tax policy, applauded the proposal late last week. “We should not permit one segment of the financial services industry to enjoy a competitive advantage over others,” he said in a statement. “The Ways and Means Committee intends to follow the legislation in the Senate with its own thorough examination of these issues.”

The push for higher taxes has come amid reports detailing the wealth enjoyed by managers in the growing private equity firm and hedge fund sector — perhaps none more so than the co-founder of Blackstone, Stephen Schwarzman, whose stake could be worth as much as $7.5 billion.

A former treasury secretary in the Clinton administration, Robert Rubin, last week suggested that the tax rate for managers at such firms should be more than doubled, by taxing their fees as ordinary income rather than capital gains.

The proposals have drawn opposition from the top three declared Republican candidates for president. “I don’t like raising taxes at all,” Mayor Giuliani said yesterday in an appearance on CNBC, after being asked about Mr. Rubin’s statement. He said booming Wall Street bonuses had contributed to surpluses for the city, and he pushed for lower taxes on capital gains as a way to encourage investment.
Aides to Senator McCain of Arizona and a former Massachusetts governor, Mitt Romney, have also indicated their opposition.

Asked about the issue yesterday during an appearance in California, Mayor Bloomberg did not take a position, saying policymakers should look back to the writing of the tax code to determine whether the intended public purpose of certain provisions is currently being served.

The Senate proposal is seen by some as targeting Mr. Schwarzman, whose lifestyle has been fodder for the press. At a dinner held in his honor last night at the New York Public Library, several of his high-powered friends stood by him. Martha Stewart called him a “very powerful and popular figure,” while a vice chairman at J.P. Morgan Chase, James Lee, told The New York Sun that Mr. Schwarzman was “building the Wall Street of the future.”

“I think Steve will go down in the same vein with people like John Rockefeller and old man Morgan,” Mr. Lee said.

In his remarks at the library last night, Mr. Schwarzman made no reference to the tax debate or the upcoming initial public offering.