Baucus expects 'carried interest' tax increase in extenders bill

Senate Finance Chairman Max Baucus (D-Mont.) on Wednesday said a tax increase on compensation deemed "carried interest" will likely be a part of legislation extending several tax and spending measures. 

"I do," he said, when asked if the tax increase would be included in legislation that ultimately passes the Senate. 

The levy has drawn considerable resistance from Democratic and Republican senators who feel the tax increase would negatively affect the economy. One opponent was Sen. Chuck Grassley (R-Iowa), the ranking member on Finance, who last week told The Hill that no conservatives in his chamber would support the hike. 

However, Grassley changed his tune today. He said that if the tax increase was structured correctly at least some Republicans could support it. 

"It depends upon whether it's structured, the carried interest tax, is structured so you don't have to restructure all the business arrangements that each hedge fund has that's a little bit different," he said. 

Grassley did not provide any detail beyond this statement. 

A bigger issue to the Senate approving the bill is if House leaders can whittle-down the 'doc fix,' a term that describes delaying a cut in Medicare reimbursements to doctors. 

The House leaders want to extend the fix for 5 years. Senators think its $88 billion cost is too expensive, especially since it is not offset. 

Grassley said a 1-year extension of the fix is being discussed in the Senate. Baucus said discussions between the chambers are ongoing. 

"We've been talking, Congressman [Sandy] Levin and I, the Speaker, the Leader — Congressman [Steny] Hoyer — we've had lots of conversations," Baucus said. 

Details on the extender bill remains under wraps since Rep. Sandy Levin (D-Mich.) did not speak about it with his caucus. 

"The issue did not come up in the caucus," Levin told reporters. "So it's going to be brought up tomorrow morning."

The congressman expects the House to vote on the legislation by Friday.