Venture Capital Tax Break

The Boston Globe reported that the House of Representatives voted to remove the tax break for venture capital firms, private equity firms, and hedge funds. According to the current legislation these firms are granted with 15% tax on much of their profits that are considered long-term capital gains, and not the 35% tax rate that applies otherwise.
It seems that the majority of the votes supported the removal of the tax break with the argument that this will make it fair to the millions of hard-working Americans that pay taxes at rates up to 35%.
From a purely economic perspective, it can be easily argued that venture capital tax break brings much greater benefit than the potential 20% tax increase. The reason long-term capital gains are taxed at a lower tax rate is to provide incentives for investors to make capital investments and to fund entrepreneurial activity. What has been overlooked is that the best new business ideas have grown and succeeded mainly due to the venture capital financing. The venture funding, to a large extent, helps increase economic development, particularly in underdeveloped business areas, which leads to job creation and increase in tax revenue.