WASHINGTON(Bloomberg) — The two leaders of the Senate Finance Committee said they would consider moving up a proposed deadline in legislation that would more than double taxes for publicly traded buyout firms such as Blackstone Group LP.

The committee's chairman, Max Baucus, said he is "open" to shortening the five-year grace period included in legislation introduced last week that would subject private-equity firms that go public to the same 35 percent rate as corporations, his spokeswoman Carol Guthrie said. Blackstone, which raised $4.13 billion today in the largest US initial public offering in five years, would have been allowed to continue paying a 15 percent capital-gains rate until 2012 under the Senate bill.

"Chairman Baucus has received a great deal of feedback on the Baucus-Grassley bill on publicly traded partnerships from people who feel that the senators are taking the right approach," Guthrie said yesterday. "A number have said that, in their opinion, the proposed five-year transition period for currently traded and SEC-filed publicly traded partnerships is too long and should be shortened."

Guthrie said Baucus, a Montana Democrat, is reviewing "with interest" a House bill introduced yesterday by Representative Peter Welch, a Vermont Democrat, that would require Blackstone to begin paying taxes at the corporate rate immediately after going public.

Baucus also plans to have hearings before August on the broader question of whether to raise taxes on fund managers' profits, known as carried interest, Guthrie said. Carried interest currently qualifies for the capital-gains rate, and critics such as former Treasury Secretary Robert Rubin have said managers should be required to pay ordinary rates.

Senator Charles Grassley of Iowa, the ranking Republican on the finance panel and a co-sponsor of the legislation, is also "open" to shortening the grace period, his spokeswoman, Jill Gerber, said yesterday.

Both the House and Senate bills would also tax other publicly traded private-equity firms and hedge funds such as Fortress Investment Group LLC as corporations instead of partnerships.

John Ford, a spokesman for New York-based Blackstone, manager of the world's second-largest buyout fund, declined to comment yesterday. Blackstone shares will begin trading tomorrow.

In a filing with the US Securities and Exchange Commission yesterday, Blackstone acknowledged the Welch bill and warned investors, "if either proposed legislation survives the legislative and executive process in its proposed form and were to be enacted into law, we would incur a material increase in our tax liability when such legislation begins to apply to us."

The Private Equity Council, a Washington trade group that represents Blackstone and other firms including the Carlyle Group and Apollo Management LP, said today it would fight the legislation.

"The Baucus-Grassley legislation, by significantly raising taxes on US private-equity firms that seek to offer shares to the public, will discourage them from tapping into the most robust capital market in the world — the United States," said Private Equity Council President Douglas Lowenstein. "US firms will be put at a competitive disadvantage to overseas firms that can manage investment funds at a lower overall tax cost."

In the House, Ways and Means Committee Chairman Charles Rangel said he would hold hearings on "the important issues surrounding private equity, carried interest, and publicly traded partnerships."

"While the Senate has outlined their own unique approach on these issues, the House is not bound to consider identical legislation — especially as it pertains to transition rules," Rangel said. He said last week his "historic opposition to retroactive tax legislation may not apply" to the Blackstone case.

Mark Weinberger, vice chairman of Ernst & Young LLP and a former assistant treasury secretary for tax policy in the Bush administration, said it would be unusual for lawmakers to shorten rather than extend a transition period. Investors shouldn't assume the five-year grace period in the Senate bill would be in final legislation, he said.

"That's going to remain an open question," he said. Weinberger also said there may be lawmakers who would seek to extend the transition period.

In another potential sign of congressional concern over Blackstone's IPO, Senator Jim Webb, a Virginia Democrat, asked federal authorities to delay the share offering until "serious questions about this transaction can be carefully examined and resolved."

Webb asked Treasury Secretary Henry Paulson, SEC Chairman Christopher Cox and Homeland Security Secretary Michael Chertoff to examine the "national-security implications" of Blackstone's holdings in companies that make satellite technology and software with military applications.

In a letter, Webb said federal authorities needed to ensure that the technology wouldn't be transferred to China, which recently agreed to buy a $3 billion stake in Blackstone through a state investment company.

Webb said the transaction must be examined by the Committee for Foreign Investment in the United States "to assess whether foreign investment might threaten national security and to ensure the protection of sensitive information relating to national defence and critical infrastructure."