As he points out, “The steps between making an investment and realizing a profit are many and complex and difficult. There’s nothing certain about it, which explains why carried-interest income is taxed at the long-term capital gains rate of 23.8 percent versus a top income tax rate of 43.4 percent. This is especially true in private equity partnerships. Figure that private equity investors are frequently committing capital to companies that are on the proverbial deathbed, desperate for capital infusions that might revive them. And then some private equity funds focus on developing small companies with an eye on growing them into big ones.

Source: Forbes April 16, 2017 12:56 UTC