Generally, those enjoying the benefit of a flagrantly inequitable provision in the tax code are discreet in their defense of it. Now that legislation to end private equity and other fund managers' carried interest tax break (for an explication of the issue, click here) has been introduced in Congress, some are bravely, if not so discreetly, attempting to defend it. Some amusing examples from the last couple of days --

• Steve Renna, senior vice president, Real Estate Roundtable: "They [the bill's sponsors] think they are getting the fat-cat hedge fund and private equities, and it's not the case." They may be getting those 'fat cats' -- your words -- but they are getting other unfair beneficiaries of the tax break, such as Real Estate Investment Trust managers. Feel better now?
• Renna, again: "How would you like to tie up all your attention on a deal, all that you can provide? You are betting it all on your deal, and that you will get paid in the end." Mr. Renna, can you pay a capital gains rate on casino winnings -- when you weren't betting with your own equity?
• Robert Stewart, vice president of public affairs, Private Equity Council: "If the new leaders of Congress have some programs they want to raise money for, they can certainly do that, but there's no public policy purpose to apply it to only one asset class." No one has mentioned raising money for programs, but neither would the proposed legislation to end the tax break apply to one asset class -- fear not; it would apply equally to managers of both public and private funds.
• National Venture Capital Association (NVCA) "This proposed legislation could have far reaching, negative implications for the start-up community, venture capital investment, and the US economy. It is critical that legislators identify and fully comprehend the unintended consequences of this proposal as it could impact one of the country's most important economic engines." Now what inequity can't this reasoning justify?

The defenders of the 'carried interest' tax break will need to do better when Ways and Means chair Charles Rangel (D-NY) hauls them before his committee for hearings on the issue next month.