RENEWED VALUE OF ‘CARRIED INTEREST’

“Before the two-thousands, the taxation of partnership income had never been cause for public debate. It became largely moot in 1986, when a tax-reform deal signed by Ronald Reagan equalized the rates for capital gains and top-bracket ordinary income. But George H. W. Bush and Bill Clinton raised taxes on ordinary income, and Clinton, in 1997, cut the tax on capital gains significantly. Five years later, George W. Bush cut rates on both kinds of compensation, and there was, once again, a big advantage in having one’s pay categorized as capital gains. And a growing industry was poised to profit from that distinction.”

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