GETTING 20 PERCENT OF THE PROFITS FOR YOURSELF

“One name for the tax break is the ‘hedge-fund loophole,’ but hedge funds benefit much less than private equity does, because their trades tend to be too short-term to qualify for the low capital-gains rate. At a Credit Suisse forum in Miami, in 2013, [David] Rubenstein said of private equity, ‘Carried interest is really what the business has historically been about — producing distributions for your investors from good sales and I.P.O.s . . . and getting twenty per cent of the profits for yourself.’ He went on, ‘That’s how we’ve really grown our business.’”

Alec MacGillis, “The Billionaires’ Loophole,” New Yorker, March 14, 2016, pp: 64-73.