Percy is the world's foremost authority on the proper tax treatment of carried interest.  He believes that carried interest should be taxed the same as the gains or income from which it is derived. Click here for all of his carried interest posts.

Once again, Professor Victor Fleischer, who I have challenged to a debate on the proper tax treatment of carried interest, has convinced the organizers of a carried interest tax discussion not to invite me to participate.  NYU School of Law's Tax Law Review and Law Review didn't invite me to its roundtable discussion "Does Atlas Shrug? Taxing the Rich and the Carried Interest Debate," which was held yesterday afternoon. 

NYU law professor, Daniel Shaviro, provides a helpful report.  As usual, the only person in attendance making any sense is a non-academic:

[Jon] Talisman[, partner, Capitol Tax Partners and former assistant secretary of the treasury for tax policy] gave the example: A and B both put cash in a partnership that develops shopping centers. Case 1, they participate equally, doing lots of work, and get a 50% return each, which unambiguously gets CG [capital gains] treatment under current law. Why should this change because A does a bit more work than B and thus gets 60-40. For that matter, why is A here different than if he did his own thing completely, blending a lot of labor income in developing the shopping centers with his own cash, and getting CG treatment for the whole thing. So what's the deal with disproportion being fatal to the CG result?

Exactly!  What's the deal?!?  I used almost precisely this example months ago.  The deal is this: people want to impose a penalty on the sweat equity on alternative asset managers, but NO OTHER HUMAN BEINGS.