Levin's bill could more than double the tax rate for some buyout-firm managers because most of their gains are long-term and currently qualify for the 15 percent capital-gains rate. Hedge-fund managers would see less difference because their short-term gains already incur a 35 percent tax. The 2.9 percent Medicare levy would be new to both groups.

Estimates vary widely on how much Medicare income and tax revenue Levin's bill would raise. Congress' Joint Committee on Taxation hasn't yet issued a revenue estimate.

Victor Fleischer, a law professor at the University of Colorado, said private-equity managers alone may generate about $580 million a year in additional Medicare funds if Levin's bill is enacted. That figure may more than double when hedge funds and venture capital are added to the mix, Fleischer said.

Viva Hammer, a former Treasury official now at the law firm of Crowell and Moring LLC in New York, said the top 25 hedge- fund managers alone could generate $7 billion for Medicare over 10 years. That is equal to the cost of insuring about 68,627 retirees each year.

The National Women's Law Center, a Washington-based advocacy group, said in a report this week that the managers are "depriving Medicare of $900 million to $1.8 billion per year" by avoiding payroll taxes. "This is enough to pay the Medicare hospital costs of 204,000 to 408,000 Americans," the center said in a statement.

Medicare spends about $10,200 each year for a retiree, so every $1 billion in additional revenue would provide coverage for 98,039 senior citizens.

"This is a big factor for Congress to consider as it works to determine if the capital-gains tax laws are operating as intended," said Senator Charles Grassley of Iowa, the ranking Republican on the Senate Finance Committee.

The House Ways and Means Committee held hearings on the bill this week, and the Senate Finance Committee held two hearings in July. Finance Committee Chairman Max Baucus, a Montana Democrat, and Grassley said they are considering drafting their own legislation in the Senate. Democratic Senator Charles Schumer

of New York said he would support a bill that raises capital- gains taxes on all partnerships rather than exclusively on investment firms.

Some experts said Levin's proposal would generate little or no new money for Medicare and the general fund. "I'm skeptical about raising a lot of revenue out of this because people will plan their way out of it," said Daniel Shaviro, a tax-law professor at New York University.

Still, supporters of the measure said lawmakers are likely to push ahead. "Rank-and-file workers have to pay Social Security and Medicare taxes," Grassley said. "These are questions of tax fairness."