June 27,2007

Comment on Purpose of Legislation Regarding Publicly Traded Partnerships

Finance Committee Chairman Baucus and Ranking Republican Grassley commented late today on White House and Treasury Department reaction to their legislation regarding the taxation of some publicly traded partnerships. On June 14, the Finance leaders introduced legislation to clarify the 1987 law that requires corporate taxation of all publicly traded partnerships, affirming that publicly traded partnerships that directly or indirectly derive income from investment adviser or asset management services are not entitled to an exemption from the corporate tax that is available to firms whose income is at least 90 percent or passive – derived from dividends or royalties, for instance.

“Our legislation is meant to make sure that tax laws are applied fairly across the board. With few exceptions, all publicly traded partnerships have been taxed as corporations for the past 20 years. Far from singling out one industry for punishment, we’re simply clarifying that private equity firms and similar businesses should not receive special treatment in the tax code. No one group of businesses should gain an edge over its competitors by claiming a tax status for which they do not qualify. Applying our tax laws fairly and according to precedent will make sure that American business continues to thrive and grow across all sectors.”