Private equity tax talk amplifies

NEW YORK (CNNMoney.com) -- Taxes undoubtedly are weighing heavily on the minds of private equity's kings these days.

Senate Finance Committee members have been considering changing the way private equity firms are taxed, although it's unclear what any legislation would look like.

"This is one of a number of issues the Committee staff are looking at and being briefed on," a committee aide said Tuesday.

But the source emphasized that no proposals or bills had been drafted. "This is still an area that is just being looked at," she said.

A potential tax hike on private equity has been an issue circulating around the industry for months now.

Industry experts say any legislation would likely focus on "carried interest" - the usual 20 percent share of profit private equity fund managers take on their investments.

Currently carried interest is taxed as long-term capital gains at a rate of 15 percent. A shift to tax carried interest as ordinary income, however, could raise the rate to as high as 35 percent.

Changing the tax treatment on carried interest would not only affect private equity funds, but real estate and hedge funds as well.

While the tax talk has been percolating for some time, it's still unclear when, if at all, such a bill will be proposed.

Senate Finance Committee Chairman Max Baucus, D-Mont., said earlier this week that his committee is not anywhere near close to drafting a bill.