Paying taxes is an annoying day for most small-business owners, but for a very affluent minority of favored entrepreneurs, it's more like Christmas—with the rest of us playing the role of Santa Claus. These fortunate few, managers of hedge funds and private equity partnerships, receive a gift every year from the tax code, one that Congress hasn’t had the guts to take away from them.

There’s a new move afoot to put an end to this absurd inequity. It’s an acid test of Congress’s ability to face down lobbyists for Wall Street interests. So don’t get your hopes up.

The term for this boondoggle is “carried interest.” Ordinary mortals, be they small-business owners or ordinary wage slaves, pay a maximum federal income tax rate of 35 percent on what they earn, with another 15.3 percent in Social Security and Medicare payroll taxes tacked on to that. But a few very wealthy people are taxed on most of their earnings not as income, but as capital gains. Thus they never pay more than the 15 percent capital gains rate, so they get a free ride on the payroll taxes.

The Private Equity Council, which represents buyout firms, defends carried interest, contending that the lower tax rate is justified “because it represents the profit that an investment partnership earns by buying a capital asset—in the case of private equity, a company—increasing its value over time and eventually selling it for more than the purchase price.”

However, opponents point out that buyout and hedge funds are not deploying their managers’ personal cash, but—for the most part—use money raised from investors. Their slice of the take is hefty. Hedge fund managers get 20 percent of the profits of the funds they manage, plus another 2 percent asset-management fee. The 2 percent fee is taxed as income, but the 20 percent of profits—by far the lion’s share of their income—is taxed as capital gains. Citizens for Tax Justice asserts that it is “simply wrong, and an insult to middle-class people working to attain the American Dream, that they have to send a higher percentage of their income to Washington than a billionaire fund manager does.”