The American public might never have heard the term “carried interest” if Mitt Romney’s 13.9 percent tax rate hadn’t threatened his lock on the Republican presidential nomination this year. After rivals like Newt Gingrich attacked Romney’s work at private equity firm Bain Capital, which Romney co-founded, and the tax issue made headlines, Romney has struggled to maintain his lead in the Republican primary race.
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Now the once-obscure tax issue is front and center of the political debate. Democrats who’ve long railed against the carried interest tax loophole have raised it again. Even überconservatives in the Republican Party are mentioning it as a tax break that might need to go. Hedge funds, many of which have complained that carried interest mostly benefits private equity funds (like Romney’s Bain Capital), not hedge funds, are also coming out of the closet.