November 7, 2007 03:05 PM | | Bookmark and Share

The Hill newspaper reported today that the Real Estate Roundtable, a trade association for real estate developers, has hired Douglas Holtz-Eakin to defend the tax loophole for “carried interest.” Holtz-Eakin was the Chief Economist on President Bush’s Council of Economic Advisors and later the director of the Congressional Budget Office.

Carried interest is the share of profits that investors pay to their fund managers to compensate them for managing the investors’ money. But fund managers have been allowed to pretend that this compensation represents profits on money they have invested themselves, thus entitling them to pay taxes at the low capital gains rate of 15 percent rather than the regular rate of 35 percent that other highly compensated workers pay.

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