Last year, during the height of proposals to increase taxes on private equity companies and hedge funds, one firm, The Blackstone Group, paid its lobbying shop more than $4.4 million, a meteoric sum by any K Street standards.

But this year, as the Congressional and campaign rhetoric has cooled, so it seems has Blackstone’s lobbying spending. For the first quarter of this year, the company reported paying its lobby shop, Ogilvy Government Relations, less than $5,000.

The proposals that sparked such brouhaha last year were aimed at raising the tax rate on carried interest and the tax on publicly traded partnerships that become public companies.

Carried interest, now taxed at the 15 percent capital gains rate, refers to the percentage cut that partnerships pocket after profitable deals. A proposal floated last year would have changed it to the income tax rate, effectively raising it to more than 30 percent.

Ogilvy lobbyists declined comment, and a spokesman for Blackstone did not return calls seeking comment, so it’s impossible to know the reasons for the decline (and there’s no first-quarter comparison for 2007, as such reports just began this year).

But clearly, the Blackstone lobby receipts closely — and dramatically — parallel the rise and subsequent fall of private equity tax issues, which have received surprisingly little attention so far this year.

Still, lobbyists working both sides of the issue expect it to resurface on the campaign trail this summer and come back with a vengeance in the next Congress.

“Carried interest has been put on the back burner for a multitude of reasons including Congressional priorities to focus on the economy and housing, but also because it is a complex and politically thorny issue to tackle by itself,” said lobbyist Todd Boulanger, who monitors the issue for Cassidy & Associates.

“I have no doubt the issue will come up again in the 111th Congress in the context of broader tax reform,” Boulanger said.

Other lobbyists for private equity and hedge funds, speaking privately, said the tax issues had subsided more for political reasons, with Democrats hauling in millions of dollars from the industry.

Indeed, according to federal election data compiled by the Center for Responsive Politics, both private equity companies and hedge funds have stepped up their donations this election cycle.

The private equity community has doled out more than $7.1 million to Democratic candidates this cycle; they gave Democrats $3.6 million in the 2006 election cycle.

Hedge funds, meanwhile, have contributed $7.2 million to Democratic coffers compared with $3.5 million in the 2006 cycle. In both cycles, both industries gave more to Democrats than to Republicans.

“They raised enough money … they put the issue on ice,” said one veteran tax lobbyist, who would not be quoted by name. “The issue is not dead by a long shot, because it’s a gaping loophole and they’ll probably be back to it next year.”

Said another longtime tax lobbyist: “Democrats won’t be as in love with those big checkbooks next year.”

The carried interest bill, which was pushed last year by Rep. Sander Levin (D-Mich.), was briefly and quietly considered as an offset to help pay for the GI bill.

Instead, that bill passed the House last week with another “pay-for” that would increase the tax rate on couples making more than $1 million a year.

Levin, in a statement sent to Roll Call, said he still views his bill as “a part of the coming debate about how to reform our tax code to make it simpler and fairer.

“The basic principle here is tax fairness,” he added, noting that both Sens. Barack Obama (D-Ill.) and Hillary Rodham Clinton (D-N.Y.) voiced support for the change.

Lobbyists and Congressional sources agreed that Members are reluctant this year to increase taxes on investment companies while the economy is hurting.

“We should be dealing with deferred compensation, tax havens, and capital gains, and, yes, we should be fixing the carried interest issue, and we should do it in a way that avoids unintended consequences and is thoughtful,” Sen. John Kerry (D-Mass.) wrote in an e-mailed statement to Roll Call. “Will it happen this Congress? I don’t know.”

Business lobbyists said that when it comes to carried interest and partnership taxation, Members must move carefully.

“When this was first proposed, people saw it as going after a handful of very wealthy guys,” said David Hirschmann, president of the Center for Capital Markets at the U.S. Chamber of Commerce.

“Once they took a step back, it turns out that that particular section of the tax code is used by 2.8 million partnerships” including real estate partnerships,” Hirschmann added.