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Senator Hillary Clinton (D-NY) weighed in on the debate on private equity taxation Friday afternoon, according to the New York Times [registration required]. And earlier on Friday, I had my own chance to debate this issue on CNBC with Wall Street Journal Assistant Managing Editor Alan Murray.

Clinton wants private equity firms to pay the same tax rate as working families, rather than the 15% they currently pay. At a rally in Keene, NH, she said, "Our tax code should be valuing hard work and helping middle-class and working families get ahead. It offends our values as a nation when an investment manager making $50 million can pay a lower tax rate on her earned income than a teacher making $50,000 pays on her income."

If she is elected president, Senator Clinton said, she will work to reform the tax code to ensure that carried interest "is recognized for what it is: ordinary income that should be taxed at ordinary income tax rates."

In my CNBC interview, I pointed out that private equity was being singled out because it was flaunting its wealth and its low tax payments -- in other words it was demonstrating that it did not understand how to play politics. Murray suggested that Congress ought to do "what's right" and challenged me to describe a principle for taxing private equity.

While most people realize that there's really no good reason that massive private equity firms should be taxed differently than corporations like Goldman Sachs Group (NYSE: GS), the big money bigwigs have support where it really counts: Washington, DC.

Some Senate Democrats like Charles Schumer of New York have been strangely silent on the issue, although Congressman Charles Rangel and others have been staunch supporters of a bill to increase taxes on private equity funds. According to The Wall Street Journal [subscription], private equity firms may have bought themselves an ear in Washington: "Most of the leading candidates for president in 2008 have attracted strong support from private-equity firms. Republican contender Rudy Giuliani's top contributor so far has been hedge fund Elliott Associates LP, where executives and employees have provided about $195,000 of his campaign funds so far. Democratic candidate John Edwards has raised about $182,000 from individuals associated with Fortress Investment Group LLC [NYSE: FIG], a hedge fund where he worked, according to the Center for Responsive Politics."

Republican candidate Mitt Romney amassed much of his fortune and reputation as the founder of Bain Capital, and Sen. Hillary Clinton also has received large donations from firms including Farallon Capital Management LLC and Avenue Capital Group.

There seems to be little question that newly public private equity firms should be taxed like other corporations. As Alan Murray writes in yesterday's Journal, "that's a hornet's nest that legislators won't want to touch. In the end, Mr. Schwarzman's best defense isn't that his current tax treatment makes sense, because it doesn't. It's that any effort to fix the problem will arouse a poisonous swarm of special interests."

It would be nice if Congress would stand up to the special interests and tax private equity funds fairly -- not because it would generate that much additional revenue, but because it makes sense.