Changes

Carried interest is a form of performance-based compensation that general partners of private investment funds receive in exchange for their work. It is generally calculated as 20 percent of a fund's profits<ref name="taxpolicycenter" />. The Carried Interest Debate revolves around the controversial tax policy imposed upon carried interest in the U.SUnited States. Currently, carried interest is treated as a capital gain for tax purposes rather than ordinary income, which results in it being taxed at a maximum rate of 20 percent<ref name="bell" /> rather than 39.6 percent<ref name="taxbracket" /> and receiving a perceived advantageous tax deferral. Opponents of carried interest criticize this tax policy for being unjust. Its supporters argue that the policy is necessary to encourage investment activity.