Wall Street Lobbyists Move Quickly to Stifle Rangel Tax Plans

Wall Street Lobbyists Move Quickly to Stifle Rangel Tax Plans

By Alison Fitzgerald and Ryan J. Donmoyer
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Oct. 22 (Bloomberg) -- House Ways and Means Chairman Charles Rangel is preparing to unveil what he calls ``the mother'' of all tax proposals. When he does, he may set off the mother of all lobbying battles as Wall Street races to block higher taxes on hedge-fund managers, Blackstone Group LP and other buyout firms, and venture capitalists.

Rangel's proposals will be in two bills he plans to introduce this week: An $80 billion measure to temporarily protect 23 million U.S. households from the alternative minimum tax, and a broader, $1 trillion overhaul of the tax code that would eliminate the levy altogether. The tax, which was originally aimed at the wealthiest Americans, now affects more and more middle-income earners.

Business lobbyists are girding for imminent battle. ``The next two weeks are extremely critical,'' says Mark Heesen, president of the National Venture Capital Association, a Washington-based trade group that has been fighting a proposal to more than double the tax rate on ``carried interest,'' the income executives in hedge funds and venture-capital, buyout and real-estate firms earn for managing investors' money.

Besides higher taxes, Rangel may also seek new reporting rules for investors at financial-services companies such as Vanguard Group Inc. and a crackdown on corporate shelters. While the New York Democrat won't yet reveal what the bills will include, he said in an interview that ``we have found enough tax provisions that we believe that using them would raise the revenue that would pay'' for his plans.

Paying for the changes will be `` politically painful,'' he warns.

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