U.S. Congress could move quickly on Blackstone bill

By Kevin Drawbaugh

WASHINGTON (Reuters) - The U.S. Congress could move as early as July toward passage of a bill to raise taxes on Blackstone Group LP BG.UL and other private equity firms that go public, congressional staffers said on Friday.

Backers of the bill were expected to spend the immediate future weighing reaction to it, with an eye on the narrowing window for legislation ahead of a scheduled August recess and the 2008 election campaigns kicking into high gear.

An aide to Montana Democratic Sen. Max Baucus, one of the bill's co-authors, said, "There's no immediate timetable for action, but we'll move forward as appropriate."

The financial world was stunned on Thursday when the bill was introduced by Baucus, chairman of the Senate Finance Committee, and its senior Republican, Iowa's Charles Grassley.

The bill is aimed at closing what some lawmakers see as a tax loophole that would allow private equity firms and hedge funds to become publicly traded companies without having to pay the same taxes paid by corporations.

It has the potential to more than double the effective tax rate on publicly traded partnerships to as much as 35 percent from the 15 percent now paid by partners.

Blackstone, one of the nation's largest private equity firms, said on Friday that if the bill becomes law it could lower the company's profits and its overall value.

Blackstone is planning to go public later this month in an offering valued at roughly $4 billion.