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Cox Cautions Congress

The US Congress should be careful to ensure that legislation it might consider to increase taxes on private equity partnerships does not dampen US capital formation, Securities and Exchange Commission chairman Christopher Cox has warned.

Cox, testifying at the House Financial Services Committee, said changes in tax policy can have an effect on capital formation, and warned that the SEC has 'some concerns' about current proposals in Congress.

One such proposal in the Senate would increase the tax rate on private equity partnerships that are taken public to as high as 35 pct from the current rate of 15 pct. Another bill introduced in the House last week would increase taxes in a similar way on fund managers.

Cox said he would 'urge Congress to consider capital formation' when considering legislation, especially legislation like the Senate bill that would only increase taxes on private equity partnerships that go public. Cox said proposals such as these could discourage partnerships from going public.

Elsewhere, Cox and the four other SEC commissioners at the hearing said they do not believe new legislation is needed to address complaints about implementation costs of the Sarbanes-Oxley legislation that toughened corporate governance standards.

pete.kasperowicz@thomson.com