Mankiw On Capital Gains: Why Are They Special?

What Are Capital Gains, And Why Are They Special?

WHAT is carried interest? And why does it get the tax treatment it does?

These arcane questions are usually reserved for the green-eyeshade crowd. And for good reason: they can be so bewildering that they seem to be taken from an I.Q. test written just for accountants. But because they concern a few very high-income individuals, including the presidential candidate Mitt Romney, for whom I am an adviser, they have been getting broader attention lately. So let's examine the issue.

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