The US House of Representatives will approve a bill raising taxes for buyout firms and hedge-fund managers next month, Ways and Means Committee chairman Charles Rangel (D-New York) has said. The $48 billion measure would generate enough revenue to prevent many middle-class households from being subject to a $2,000 average tax increase under the alternative minimum tax (AMT) this year, he said.

Rangel, 77, says he''s looking for a way to prevent the AMT from coming down heavily on 23 million people. He said he plans to wait until next year before seeking a vote on a sweeping tax overhaul, which he calls "the mother of all reforms".

Announced on Thursday 25 October, the proposal would raise taxes on higher-income families and some businesses, while cutting bills for the working poor and lowering the corporate rate. Republicans say Rangel and his party are trying to raise taxes by more than $1 trillion.

Rangel said he expects to win the support of Treasury Secretary Henry Paulson for a provision that would cut the corporate tax rate to 30.5 per cent from 35 per cent. But Paulson, who has advocated a lower corporate rate in the past, denounced Rangel''s proposal, saying it would "hinder America''s ability to compete" and "undermine job creation".

President George W Bush also rejected Rangel''s overhaul proposal on Friday, saying it was a "massive tax package that raises taxes on more than a million small-business owners, among others".

But Rangel said his overhaul plan simplifies the tax system and eliminates provisions that benefit only a few taxpayers. He says he wants to "rearrange the code" so that middle-income taxpayers and the working poor get more benefits, while wealthy households shoulder more of the burden.

He proposes a 4 per cent tax-rate surcharge on adjusted gross income over $200,000 for married couples. The surcharge would rise to 4.6 per cent for couples with incomes of more than $500,000. Overall, said Rangel, his measure will cut taxes for 90 million US households, letting more poor families claim the $1,000 per child tax credit, doubling the earned income-tax credit for the working poor, and boosting standard deduction by $850 to $11,550.

Rangel scoffed at Republican claims that his proposal is "the mother of all tax hikes". He said his proposal complies with House budget rules known as ''pay-go'', that require all tax cuts be offset by separate tax increases or decreases in spending.

"Let those who believe they''re getting a tax increase come forward," he said, "not Republican rhetoric, but companies and individuals who believe that the tax plan is unfair." "I know one thing," he pointed out, "90 million people will appreciate the tax cut."

Rangel said the narrower measure to curb the minimum tax for one year would be introduced next week. The proposal would more than double the tax rate on so-called carried interest, the compensation that executives at buyout and venture-capital firms, as well as real estate and oil and gas partnerships, receive for managing investments. It also would require hedge-fund managers to pay tax on income they defer in offshore accounts.

He dismissed suggestions from both Republicans and Democrats in the Senate that the pay-go requirement should be waived to pass temporary minimum-tax relief. "It will be very difficult for the Democratic leadership to call this an emergency and bypass the pay-go rules," Rangel said.

Rangel said he was "not impressed" with criticism by Senate Democrats like Charles Schumer of New York and John Kerry of Massachusetts that increasing taxes on private-equity firms and hedge funds could disrupt financial markets and hurt job creation.