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The venture capital industry is engaged in an urgent effort to ward off Congress from significantly increasing the taxes on profits made by venture firms.

The House today voted in favor of the Tax Extenders Act of 2009 that would raise tax rates on carried interest earned by investment managers – including venture firms – to ordinary income rates, or around 35%, from a lower capital gains rate of 15%. While venture firms collect management fees of about 2% committed capital, carried interest - or the profits made when portfolio companies are sold or go public - is the big money maker for VCs.

For VCs, Tax Hike Threatens Innovation, But Also Fairness - Venture Capital Dispatch - WSJ