Tax Rule Opens Rich Vein for Debate

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This article discusses the ongoing debate as to whether Romney continued to provide services to Bain Capital after he left in 1999, at least as far as that concept is defined by a 1993 IRS pronouncement. If he does not qualify under that policy tax lawyers say he might not be entitled to profits from Bain Capital investments. In the complex accounting of Mr. Romney's income, that could land him with a bill for back taxes. The tax assessed on carried-interest compensation has long been the subject of partisan controversy. Democrats have been trying to kill the provision, which benefits private-equity, real-estate and venture capital executives by allowing them to pay the capital-gains rate on a big portion of their compensation, significantly less than the 35% maximum rate for wages. Some say that the earnings are a form of capital gains and changing the law would punish the people whose investments help create jobs.