WASHINGTON — The Senate majority leader, Harry Reid, said lawmakers won't take up legislation this year that would increase taxes on some managers of hedge funds, buyout firms, and real-estate partnerships and may consider it in 2008.
"It won't be this year," Mr. Reid, a Democrat of Nevada, said in an interview Monday. "It could be next year."
Mr. Reid said he favors legislation that would affect partnerships beyond private-equity firms, such as those that invest in commercial real estate and oil and gas pipelines.
A Democratic proposal in the House would more than double the tax rate paid by hedge funds and private-equity firms or their managers. It would tax so-called carried interest — the share of profits that managers receive for their services — as wages at rates as high as 37.9%, rather than the capital-gains rate of 15%. The legislation takes Mr. Reid's approach of including commercial real estate and other partnerships.
Mr. Reid is still weighing various options and "hasn't ruled anything in or out," his spokesman, Jim Manley, said yesterday. The Senate Finance Committee last week began debating whether to draft a similar measure. Last month, the panel's Democratic chairman, Senator Baucus of Montana, and its ranking Republican, Senator Grassley of Iowa, introduced separate legislation that would tax publicly traded hedge funds and private-equity firms, such as Blackstone Group LP, as corporations rather than partnerships. That would effectively raise their tax burden from 15% to as high as 35%.
Mr. Baucus said July 11 that the committee's legislation would be considered earlier than the broader bills proposed in the House.
Mr. Reid yesterday said extensive hearings are needed.
"I don't think that's something you can just march on the floor and start voting on it," Mr. Reid told reporters after a weekly meeting of all Senate Democrats. Rising inequality of income in America makes the legislation worthy of debate he said.