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On Capitol Hill, Charles Rangel, chair of the House Ways and Means Committee, has said he plans to attach a tax increase on fund managers to legislation to permanently eliminate the AMT for most families, hoping for a political win-win.

The low tax rate on private equity managers seems to have provoked a David vs. Goliath sympathy among lawmakers and the public. “There is something visceral about the low tax rate on this group,” says Knoll. “This is such a compelling story because some of the very wealthiest people in the country are taxed on their income at 15 percent while people who make significantly less are taxed at much higher rates. The usual example is the private equity fund manager who is taxed at a lower rate than his secretary. It plays out as a simple, straightforward story of inequity.”