President Obama's budget for 2013 contains a familiar proposal that will set alarm bells ringing at venture capital and private equity firms across the land.

Once again the President is looking to boost the tax that VCs and other private equity professionals pay on their investment profits, or carried interest. Those profits currently are taxed at the 15% capital gains rate. The Obama administration would tax them as ordinary income, subject to rates of up to 35% under current law.

The budget projects that the tax change would raise $13 billion over 10 years. This is less than the $14.8 billion that the measure was expected to raise over a decade when it was floated as part of last year's budget. Venture capital hasn't generated much profit over the last decade, but some investors stand to make big gains with Internet companies such as Facebook.

The carry tax went nowhere last year and its prospects this year aren't any better, at least until after the election when Congress will face the larger issue of what to do about the Bush administration tax cuts that are scheduled to expire, boosting the overall long-term capital gains rate to 20%.

In 2009, the House, which was then run by Democrats, passed the carried interest tax but Democrats failed to get a modified version through the Senate the following year after a tough fight.