By Jay Heflin - 05/13/10 08:18 PM EDT
The term "carried interest" describes a manager's share of profits in certain types of partnerships. Payouts are currently taxed at the 15 percent of capital gains rate, but Democrats want the levy to resemble ordinary income rates, which are expected to be more than 39 percent next year.
The extender bill seeks to eventually raise the tax on carried interest to ordinary income rates. The provision raises approximately $20 billion and would help pay for the extension of a number of individual and business tax breaks that expired in January.
Snowe said there should be an alternative to using tax increases to pay for the extension of other tax cuts.
"The fact is there has to be a way of addressing these issues without constantly raising the cost of government and the cost to the taxpayer," she said, adding, "We need to go in the other direction and that is my concern."
Aside from Snowe, Democratic leaders are hoping to win support from GOP centrists such as Sens. Susan Collins (Maine), George Voinovich (Ohio) and Scott Brown (Mass.), said a Democratic aide.