The Krugman op-ed in today's New York Times that Matt cites below rightly challenges Sen. Schumer for a transparent and actually meaningless position (the bill to close the carried interest tax loophole already does what Schumer demands). Krugman also hits the nail on the head, addressing the weird argument that industry defenders of the carried interest loophole make that if you take a risk by betting with someone else's money, a lot of your bettor's fee is a capital gain: We're told that the tax rate on hedge fund managers has to be kept low to encourage risk-taking. But the managers aren't risking their own money. The only risk ... is the uncertainty of their fees — and as any ... salesman who depends on commissions can tell you, most people with uncertain incomes don't get any special tax breaks. For some reason, though, Krugman keeps referring to hedge fund managers -- at least ten times in his op-ed -- without mentioning private equity fund managers once. I know that hedge fund managers are supposed to be the most nefarious creatures, about as beloved as Barry Bonds. But in fact, because hedge fund managers are generally short-term traders, very little of their "carry" qualifies as capital gains, which require a holding of at least one year. Unlike private equity managers whose assets under management don't realize gains for several years.