The House passed a bill increasing taxes on private equity, hedge fund and venture capitalists to prevent the alternative minimum tax from hitting millions of middle-class taxpayers this year.The vote, along party lines, was 216-193.The vote is a victory for Democrats, who faced stiff opposition from Republicans and the business community over the tax increase. And private equity firms spent millions of dollars opposing the tax hike.
Congress established the AMT in 1969 to tax 155 rich taxpayers who were evading taxes. If left unpatched, it would hit as many as 23 million Americans this year.

Most members of Congress dislike the AMT, but they disagree over whether to impose new taxes to pay for the $77 billion bill.

The Politico

Obviously, anyone with common sense knows that the best thing to do here is cut the spending by $77 billion, but since that requires said common sense, it won’t happen in Washington.

This is not likely to pass the Senate anyhow and even if it does Bush will veto it. Coming from a strategic point of view though, I am almost wondering if the Republicans should let this pass through. The majority of money on Wall Street has been going to Democrats this election cycle, likely because they believe they will win the White House. If this tax increase were to become enacted that would slam the Wall Street money pretty hard and send a message to them that the Democrats they have been supporting have turned on them, possibly funneling that money back to the GOP, not to mention this would give the Republicans a huge wedge issue to hit the Democrats on next year and point out to Americans the lot of Socialists that they are.

In any case, something has to be done about the AMT because if nothing happens then millions of middle class households are going to get smacked with this next year and it’s going to hurt them in the wallet far more than any hedge fund manager.