Oct. 3 (Bloomberg) -- Senator Charles Schumer said he would introduce legislation to raise taxes on executives at private- equity firms and a broad range of other partnerships, even as he acknowledged any such measure wouldn't become law before next year's election.

``My intent is to raise the most revenue and do it in a fair way,'' Schumer, a New York Democrat, said in an interview. ``My bill will certainly raise the taxes on people who now get 15 percent for carried interest, for sure.''

Schumer, who serves on the Senate Finance Committee, is at the center of a broader debate in Congress over whether to raise taxes on fund managers who now pay the lower 15 percent capital- gains rates on the share of a fund's income that they receive as profits, known as carried interest. In the past, he has opposed proposals that he said singled out private-equity firms or hedge funds.

Schumer, 56, said today that his measure would also apply to oil-and-gas, venture-capital and real-estate partnerships. ``My view is you should treat everyone across the board,'' he said.

Lawmakers such as Senator Charles Grassley of Iowa, the senior Republican on the Finance Committee, have said a broader measure would be much more difficult to pass and suggested that Schumer's position is a legislative poison pill aimed at protecting both his Wall Street constituents and his party's electoral war chest.

Campaign Contributions

The Democratic Senatorial Campaign Committee, which Schumer heads, received $779,100 from employees of private-equity firms and hedge funds in June, six times their combined total in June 2005, federal filings show. That far exceeds the industry's contributions of about $60,000 to the Republican Senate committee in the same period.

Schumer dismissed suggestions that he is seeking to protect any industry and said he isn't afraid of raising taxes on wealthy Americans.

``I think that the old bugaboo that you can't raise taxes even on the very wealthy, which is pretty much political wisdom since Ronald Reagan came in and certainly in the 1990s -- Bill Clinton tried it in '93 and got hurt -- I don't think it works anymore,'' he said.

Still, he said any effort to raise taxes on the industry has little chance of success this year because any measure could be blocked by a filibuster threat from a single senator. President George W. Bush would likely veto any measure that did manage to pass Congress, he added.

Bush Veto

``I don't know on carried interest if a single Republican has come out for it,'' Schumer said. Any bill, ``small or big, is going to have trouble passing because Bush will veto them.''

He said chances may be better if a Democrat is elected in next year's presidential elections. New York's other senator, Hillary Clinton, has said managers should pay ordinary income rates -- as high as 35 percent -- joining her rivals for the Democratic presidential nomination, Illinois Senator Barack Obama and former North Carolina Senator John Edwards, in calling for higher taxes.

Schumer said his measure would go beyond a June proposal by House Democrats such as Ways and Means Committee Chairman Charles Rangel of New York and Michigan Representative Sander Levin that would tax a manager's share of profits at rates as high as 37.9 percent.

He said that while his bill would also focus on carried interest, it would take a different approach than Levin's and ``does things in a very interesting way.'' He declined to elaborate.

Senate Bill

Schumer also said he is talking to Senate Finance Committee Chairman Max Baucus, a Montana Democrat, about changing a separate measure that would force buyout firms that go public to pay taxes as corporations rather than as partnerships.

Currently, investors pay taxes at rates as low as 15 percent on their share of the firm's income; companies pay a tax rate of as much as 35 percent before paying shareholder dividends, which are also taxed.

That bill, also introduced in June, is being revised, Schumer said, without elaborating. Baucus has previously said he may be willing to consider shortening or eliminating a five-year grace period for Blackstone Group LP and Fortress Investment Group LLC, which both went public or filed to do so before the bill was introduced.

``I don't think it's fair, and this is one of the nubs of the bill, to say if you did something before a certain date you get one treatment and if you're the exact same structure after the date you get another treatment,'' Schumer said.

To contact the reporters on this story: Ryan J. Donmoyer in Washington at rdonmoyer@bloomberg.net.

Last Updated: October 3, 2007 14:26 EDT