Law Commons^™

Not All Carried Interests Are Created Equa, Adam H. Rosenzweig

Northwestern Journal of International Law & Business

Recently, a significant debate over the taxation of so-called "carried interest "in private equity funds has received much attention from scholars, the government, commentators, and the media. This debate has focused on whether private equity fund managers who earn a percentage of the returns generated by the fund should be entitled to preferential "capital gain" treatment on such returns. The primary concern in this debate revolves around whether managers are effectively being compensated for services normally taxed at higher rates while receiving the benefit of preferential rates reserved for capital gains. Proponents of reform point to the services being performed …