A bill that would more than double the tax that private investment firms pay on their profits passed the U.S. House of Representatives Friday.

Only a few Democrats broke from their brethren to vote against the bill, as it passed 216 to 193.

While the bill would provide $50 billion worth of relief over 10 years for middle class taxpayers from the effects of the alternative minimum tax, it would also raise taxes for private equity and hedge fund firms. Those firms would have to pay regular income tax, which could be as much as 35%, on so-called carried interest, or the profits the firms earn. Currently, carried interest is taxed at the capital gains rate of 15%.

Congress does not have much longer to deal with the alternative minimum tax since, without delaying legislation it will take effect on Jan. 1.

The debate on the House floor followed predictable party lines with Democrats arguing that taxing carried interest at the lower capital gains was a tax break for wealthy individuals at the expense of the middle class.

Rep. Charles Rangel (D.-N.Y.), chairman of the House Ways and Means, likened the work private investment managers do to the work of other money managers who he said paid the 35% on their income.

“We would like to believe for capital gains, you’re actually investing capital, my God, you are taking risk, so we are going to give you a lower tax rate of 15%.”

Republicans argued that it was poor fiscal policy to raise taxes permanently to temporarily fix a different tax problem.

Jim McCrery (R.-La.), the ranking minority member on the Ways and Means Committee, said that the House requirement that tax cuts be balanced by tax revenues, or “Paygo” rules, would result in a “flood of tax increases” over the next few years.

Ultimately, McCrery said, the result would negatively affect middle class taxpayers because there would be increased taxes “when we have a housing crisis and the value of the dollar is dropping.”

McCrery decided not to offer an amendment that would have kept the alternative minimum tax from taking effect next year, but without raising the tax on carried interest.

Another provision of the bill, which has not received as much attention from lawmakers as the carried interest provision, would raise taxes on offshore deferred compensation.

The bill faces an uphill battle in the Senate. President Bush has already said that he will veto the bill as passed by the House.