Carlyle MD Sounds Retreat on Carried Interest Defense In another sign that the buyout firms see trouble ahead in their effort to preserve the carried interest loophole, Carlyle Group managing director David Rubenstein conceded the difficulty of the defense in reported remarks to an audience at the American Enterprise Institute in Washington yesterday. "We may not get everything we want; we probably won't. We may have to compromise." The carried interest loophole allows fund managers' bonuses to be taxed at the 15 capital gains rate instead of the ordinary income tax rate of up to 35 percent -- oddly, the only profession where bonuses aren't taxed at the ordinary rate, due to a quirk in the law. The lobbyists defending this quirk were defeated this month when the House passed a provision to fix by quirk by ending the loophole -- a move that would save all other taxpayers an estimate $25 billion over ten years. That followed earlier reports of disagreements between the venture capital and buyout communities, each suggesting, probably correctly that the other does not deserve the loophole. In September, the spat became public, with one VC partner hissing, The private equity industry has spent millions upon millions upon millions on Capitol Hill recently and [Sen. Charles] Grassley (R-Iowa) and others have said they don't like the pressure they're getting. But [VC is] an industry that's been on the Hill for the last 30 years.