Bush warns against raising equity tax

Washington -- The Bush administration warned lawmakers that a proposal to raise the tax rate of private equity and hedge funds would injure the U.S. economy.

Eric Solomon, the assistant treasury secretary for tax policy, urged the Senate Finance Committee Wednesday to be "cautious" in contemplating "significant changes" to partnership tax and capital gain rules, The New York Times reported.

Solomon said the rules as they are now have successfully promoted entrepreneurship for many decades.

Some lawmakers are calling for a change.

Committee Chairman Sen. Max Baucus, D-Mont., and Sen. Charles Grassley, R-Iowa, proposed raising the 15 percent tax rate on certain partnerships that go public to a top corporate rate of 35 percent.

Some senior House Democrats separately proposed raising fund managers' taxes on investment gains. The Bush administration opposes that as well.

Copyright 2007 by United Press International.