Despite the objections made by David Weisbach in his article “The Taxation of Carried Interests in Private Equity,” it is possible to make a case for Code Section 710. Section 710 proposes taxing a private equity fund manager's profit share as compensation. Weisbach argues against this proposal on the basis that principles and concepts of tax law are of secondary relevance in resolving issues of tax policy. However, this viewpoint disregards arguments of fairness or horizontal equity. Moreover, it is possible to make a case for Section 710 that does not depend on arguments about the unfairness of taxing fund managers at lower rates than working people. The writer presents such a case.

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