The carried interest tax measure, in particular, has drawn fire from private equity firms and real estate investors who are alarmed that it would mean higher taxes for investment fund managers.
Currently, certain fund managers compensation is taxed as capital gains, which is a lower rate than if it were taxed as income. Under the bill, three-quarters of those earnings would be taxed at the higher rate.
The Private Equity Council, whose members include Bain Capital Partners, the Blackstone Group and the Carlyle Group, said the provision would change 50 years of partnership tax laws.
This punitive 157 percent tax hike on growth investment by real estate venture, private equity and other firms will hurt those companies that are most desperately in need of capital to sustain or create jobs and drive growth, Douglas Lowenstein, president of the Private Equity Council, said in a statement.
An official with the trade group would not discuss its lobbying strategy. But the organization has high-powered help in Washington. The council spent $4.2 million in lobbying from January 2009 through the first quarter of this year, according to lobbying disclosure filings with Congress. To assist in buttonholing lawmakers, the group hired four outside firms, Capitol Tax Partners and the law firms of Akin Gump Strauss Hauer & Feld, Brownstein Hyatt Farber Schreck and Sullivan & Cromwell.
Real estate groups, which have also funded multimillion-dollar lobbying efforts, sent a letter to lawmakers last week opposing the carried interest changes, arguing they would hurt the commercial real estate investment.
Public interest groups and unions, however, have applauded what they see as an effort to close tax loopholes they argue unfairly benefit hedge fund managers and companies that distort their foreign income to reduce the U.S. taxes they pay.
Citizens for Tax Justice, a liberal advocacy group, is urging its members to call lawmakers and tell them to support the legislation. The group maintained that investment fund managers are currently getting preferential treatment because their compensation is being treated as capital gains.
The result is that investment fund managers who sometimes earn hundreds of millions of dollars a year pay at lower rates than their secretaries, stated a summary of the bill on the groups website.
Organized labor, led by the AFL-CIO, is also galvanizing its members to support the legislation. AFL-CIO spokesman Josh Goldstein said lawmakers who vote against the measure risk having the unions work against them in upcoming elections. He said union members were also working Capitol Hill this week.
Were definitely in full force out there, he said.
Each year since 1990, CQ Roll Call has reviewed the financial disclosures of all 541 senators, representatives and delegates to determine the 50 richest members of Congress. This year's report, derived from forms covering the calendar year 2012, shows it took a net worth of $6.67 million to crack the exclusive club.