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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[http://www.taxpolicycenter.org/briefing-book/what-carried-interest-and-how-should-it-be-taxed]. The Carried Interest Debate revolves around the controversial tax policy imposed upon carried interest in the U.S. 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[http://www.bankrate.com/finance/taxes/capital-gains-tax-rates-1.aspx] rather than 39.6 percent[http://taxfoundation.org/article/2016-tax-brackets] 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.