Interesting article today on Bloomberg:  Blackstone Says Senate Bill to Cost It $525 Million, by Ryan J. Donmoyer

Blackstone Group LP said its annual tax bill would increase by $525 million, or triple what it would otherwise pay, under legislation proposed in the U.S. Senate. The bill raising taxes on publicly traded private-equity and hedge-fund firms also would dissuade other companies from going public, depriving the government of revenue it would have collected as a result of those initial stock sales, New York- based Blackstone said in a letter requested by Democratic Senator John Kerry of Massachusetts.

From the Blackstone letter:

We believe passage of the Publicly Traded Partnership (“PTP”) bill proposed by Senators Baucus and Grassley will result in a significant loss of tax revenues for the Federal government and severely handicap a vibrant and growing part of the U.S. economy in terms of its global competitiveness.

While some industry participants may be willing to pay the heavy incremental taxes associated with transitioning to a PTP structure under the Baucus-Grassley bill, we understand that for many industry participants the proposed legislation would make a transition to a PTP structure untenable. This is because the economic burden of the increased taxes would be too large in relation to the benefits of accessing public markets, while simultaneously forcing a substantial diminution of potential public valuations. Furthermore, even if a few firms still pursue an IPO under these new tax rules, the net pickup in tax revenues from those companies would be much more marginal than is apparent for the reasons discussed below. In our opinion, the Baucus-Grassley bill would actually result in a significant net loss of Federal tax revenues by dramatically decreasing the number of firms willing to access the public markets. This would both eliminate all Federal taxes paid at the PTP level as well as have the unintended effect of losing billions of dollars in capital gains taxes which would otherwise result from the eventual monetization of shares by selling partners.