WASHINGTON (AP) — The former chief of staff of Iowa Sen. Charles Grassley, who has introduced a bill to raise corporate taxes on buyout firms, has been hired by the private equity industry to lobby against such tax increases.
Kenneth Cunningham, who was also Grassley's general counsel until he left in early 2006 to start his own lobbying firm, was hired by the Private Equity Council, a trade group representing 11 firms, including the Blackstone Group LP, according to the form posted online Oct. 9 by the Senate's public records office.
Cunningham was also hired by Akin Gump Strauss Hauer & Feld LLP on behalf of buyout firm Kohlberg Kravis & Roberts Co. to lobby on the same matter, according to a separate form posted the same day.
Generally, senior level staff are banned for one year from lobbying the congressional office or committee that employed them.
Grassley, a Republican, and Sen. Max Baucus, D-Mont., introduced legislation this past summer that would more than double the tax burden — to a corporate tax rate of 35 percent from the current capital-gains rate of 15 percent — on private equity firms that become publicly traded, such as Blackstone.
The Senate is also discussing whether to raise taxes on the share of investment profits received by private equity and hedge fund managers, also known as carried interest, from 15 percent to as much as 35 percent.
The House also has introduced legislation that would raise tax rates paid by private equity firms, hedge funds and their managers.
Supporters of tax hikes say it is unfair buyout firms pay a smaller share of their earnings in taxes than others, while the private equity industry — which has spent a combined $5 million in the first half of 2007 lobbying against such congressional efforts — says lower tax rates promote risk-taking and economic growth.
Under a federal law enacted in 1995, lobbyists are required to disclose activities that could influence members of the executive and legislative branches. They must register with Congress within 45 days of being hired or engaging in lobbying.