After years of secrecy, we now know how private equity partnerships like Blackstone operate -- as well as knowing the company's huge profit potential. The catch to full disclosure is that Congress is poised to use its taxing power to blunt things in the private equity world.

Late last week, Congress introduced legislation that would change the tax rates for publicly traded partnerships from 15% to the customary 35%. In the case of Blackstone, there may also be an additional 6% rate for state and local taxes.

The new tax bill will provide a five-year grace period for Blackstone and Fortress Investment Group (NYSE:FIG). But all other IPOs of alternative asset management firms will need to pay the corporate tax immediately.

Blackstone's latest filing indicates that that tax legislation "would incur a material increase in our tax liability and could well result in a reduction in the value of our common units." That seems to be spot-on. Last Friday, shares of Fortress fell 6.53% to $23.47 on news of the tax legislation.

"The tax proposal will deter firms who were previously 'on the fence' about going public," said Rick Rickertsen -- a managing partner of the Pine Creek fund and author of the book Buyout -- in an interview. "A big driving issue is privacy. Most of the large-firm private equity leaders are already very wealthy. A lot of them do not want their personal compensation to be available to the whole world, nor do they want the headaches of being public."

There is also speculation that Congress may increase the taxes on the "carried interest." This is the percentage of profits a private equity partnership generates from its investments; the current tax rate is 15%.

With megabuyouts like First Data (NYSE:FDC), TXU (NYSE:TXU), and Alltel (NYSE:AT), Congress would have stepped into the game, regardless of the Blackstone IPO. Yet the disclosure of Blackstone's Stephen Schwarzman's multibillion-dollar payday was a catalyst to get Congress moving. It's a good bet we'll see some more legislation as the private equity boom continues.

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Fool contributor Tom Taulli, author of The Complete M&A Handbook, does not own shares mentioned in this article. He is currently ranked 1,831 out of 30,414 in CAPS. The Fool has a disclosure policy.