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Senate Finance Committee Chairman Max Baucus said yesterday he will press ahead with a plan to boost taxes on private-equity firms that go public despite wavering support on his committee and strong opposition from the Bush administration.

Baucus (D-Mont.) told reporters that he expected the tax-writing panel to shortly approve his measure, which would take away a major tax advantage that private-equity firms like Blackstone Group benefit from as public companies.

That advantage allows partnerships such as Blackstone to pay taxes at the 15 percent capital gains rate rather than at the 35 percent corporate rate. Baucus and the provision's coauthor, Sen. Charles E. Grassley (R-Iowa), have called the lower rate an abuse of the system that permits buyout shops to get away with paying too little in taxes.

"We'll find an appropriate opportunity" to advance the provision in committee, Baucus said after a hearing on the subject yesterday. Asked if he had sufficient support to pass the measure, he said, "I think so."

But at the same hearing, the administration's senior tax policy official expressed serious reservations about the proposal. Eric Solomon, an assistant Treasury secretary, also came out against a separate and broader provision that has been introduced by Democrats in the House dealing with the same tax advantage.

Solomon said a Baucus-Grassley-type bill "raises very difficult issues." The broader House bill, authored by Rep. Sander M. Levin (D-Mich.), he added, might produce "unsettling" changes.

"We must be cautious about making significant changes to partnership tax rules that have worked successfully to promote and support entrepreneurship for many decades," Solomon said.

Solomon's hesitancy was echoed not just by Republicans on the committee, who have generally opposed such tax hikes, but by several Democrats. Sen. John F. Kerry (D-Mass.) expressed worry that venture-capital partnerships of various kinds, including real estate, might be stunted if bills like these became law. "We have to be very careful," he said.

Sen. Charles E. Schumer (D-N.Y.) added that he would not support any bills that would harm his home state or that singled out an industry, especially financial services, for a tax increase. "The U.S. and New York City must remain the leading country and city in the world for financial services and capital formation, and we shouldn't do anything to jeopardize that position," he said.

"My phone has been ringing a lot lately," Schumer said, an indication that the private- equity firms and hedge funds that proliferate in his state have been pushing hard to get the House and Senate bills killed.

Both Baucus and Grassley spoke disdainfully about the number of lobbyists retained to fight their initiative. Grassley went on to refute a few accusations from the opponents, which he described as "obfuscation" and "muddying of the waters."

Grassley said he was trying to "close loopholes" and that his interest was "not about a revenue grab." He also said that he continues to strongly support a preferential tax rate for capital gains, which are the profits from the sale of property and securities. He said he remained convinced, however, that partnerships that trade publicly like Blackstone should pay taxes at an ordinary rather than a preferential rate.

"Cool it, particularly on the hysteria out there," Grassley concluded.

Also testifying were Kate D. Mitchell, managing director of the venture capital firm Scale Venture Partners, who said the changes would hurt capital formation, and Mark P. Gergen, a partnership expert at the University of Texas School of Law, who advocated reducing the tax advantage.

Separately, lawmakers at a House hearing yesterday said that tighter regulation of hedge funds might be needed to protect investors from unexpected losses.

At the House Financial Services Committee hearing, Democrats and Republicans agreed with a previous administration recommendation that regulators need to be more vigilant in watching the activities of hedge funds and private-equity firms -- investment funds that now oversee about $2 trillion in assets. But the administration did not suggest additional regulations.

Generally only very wealthy individuals and well-heeled institutions are allowed to put money into such funds. Still, the lawmakers said heightened scrutiny would be wise because retirements of firemen, police officers and teachers often depend on hedge-fund returns since public pension funds often invest in them.

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