At present, the tax law permits partners of leveraged buyout firms and hedge funds to pretend that their fees are investment income that deserves capital gains tax treatment instead of compensation, which would be taxed at the much higher ordinary income rate.

Capital gains are taxed at 15 percent, By some estimates, the U.S. Treasury loses as much as $12.6 billion a year in these taxes. That's money that could go to fully funding the five-year cost of expanding the public health-insurance program for low-income children, securing the Medicare and Social Security programs or restoring funding for public schools.

James Simons, founder of Renaissance Technologies and the highest-paid hedge fund partner last year, earned $1.7 billion, equal to the entire federal spending on maintaining the national park system. There is absolutely no justification for billionaires not paying their fair share of income taxes like the rest of us.