New York Sun- 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.

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