Democrats in the Senate concerned about the impact of a proposed tax hike on investment fund managers have drafted new options that would tax a smaller slice of their income at ordinary tax rates, a Democratic aide familiar with the discussions said.
Under a current bill that could be debated in the House of Representatives on Thursday, 75 percent of a manager's income would be taxed as ordinary income rates, about 35 percent, compared with the current 15 percent capital gains tax treatment.
Options being developed by a handful of moderate Democrats would tax just 60 percent of the income of private equity, venture capital and real estate fund managers at the higher tax rates when in full force, the aide said.
The potential new language underscores how difficult it will be for Democrats to pass the legislation before a self-imposed deadline of this weekend.
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