That's correct. VC firms are structured as partnerships, rather than regular corporations with employees, specifically so that general partners can be compensat

That's correct. VC firms are structured as partnerships, rather than regular corporations with employees, specifically so that general partners can be compensated using "carried interest" which receives this favorable tax treatment. This change would not have any effect on the decision of investors to invest their money into VCs, as far as I can tell. This would simply remove a tax subsidy on money managers, both in the VC industry and in other activities like hedge fund management. I wish all these people well, but don't see any policy reason they should pay a lower tax rate than the rest of us.