Look, I was never seriously considering taking my management company public, so all you media types can stop e-mailing and calling to get my reaction to the Baucus-Grassley bill that will cause publicly-traded private equity firms organized as limited partnerships to be treated as corporations for tax purposes.  I feel bad for my pals at Blackstone, whose IPO is scheduled in a couple weeks, and Fortress, whose IPO was a few months ago, and for those who had dreams of working for a publicly-traded partnership.  Those dreams have been dashed, forever. 

(Here's Bloomberg's Ryan Donmoyer's report on the proposed legislation; here's Victor Fleischer, the Harriet Beecher Stowe of the War Against Private Equity; and here's Larry Ribstein.)

This development, though, is, without question, an indirect way of raising the tax rate on carried interest for those private equity firms that are publicly traded.  But is it a harbinger of greater evil: a direct increase of the tax rate that will apply to all of us?  I say, "no" because I'm still working on my paper defending the current tax treatment, and I fully expect it to end the debate once and for all.  In the meantime, here's Holman Jenkins in the WSJ:

In the mists of time (i.e., the 1970s), it was settled by the tax authorities that when passive investors in a partnership agree to share any future profits with a managing partner, the transfer of this "carried interest" will not be taxable at the time it's granted. Furthermore, any profits under the deal will be taxable as capital gains, not income, which today means 15%, not 35%.

Having picked up their papers and noticed the riches now being realized by private equity partnerships, various observers (labor, journalist, academic) have begun to complain that this treatment is inappropriate and preferential. They gripe that since the managing partner is being paid for managing (i.e., work), he or she should have to pay full income tax like any other worker.

The counter argument: An ordinary worker gets his wage whether or not a venture is a success; a PE managing partner receives a share of the profits only if there are any.

Read the whole thing (even though he isn't sufficiently supportive of maintaining the current treatment . . . and neither is Ribstein).

For the view of a private equity hater whose vengeful bite puts him at number one on my enemies list, I give you the Epicurean Dealmaker.