Revised House tax bill takes aim at offshore accounts

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In the latest twist in the tax debate, the U.S. House of Representatives passed a bill Wednesday that could result in a large tax increase on hedge fund earnings.

The measure, H.R. 4351, attempts to reduce the impact of the alternative minimum tax (AMT) on middle-class Americans – and to pay for this relief by closing a loophole that allows hedge funds to defer taxable gains earned in offshore accounts. The effort still faces difficult passage in the Senate, and President Bush has promised a veto.

Eliminating the offshore income tax deferral for hedge funds could recover a projected