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Fast forward to now. a private equity fund makes money usually in the millions. a big chunk of that money goes to the investor, like the old ship's captain, 20% goes back to the fund manager. that 20% is carried interest. the fund manager pays 23% tax, 23 23% -- 23.8%, capital gain tax and 3.8 invest tax. how it should be according to those who view fund managers as entrepreneurs. the idea, entrepreneurs should reap rewards from selling something that they built. putting their capital at risk. others argue for closing the loophole saying 20% cut is actually income. like you would earn income. ...

There ain't no hedgefund managers carrying anything. the fund makes money, usually in the millions, a big chunk going to the investor. but like the old ship captains, 20% goes back to the fund manager. that 20% is carried interest. the fund manager pays 23.8% tax on the money, a 20% capital gains tax and 3.8% investment tax. that's how it should be according to those who view fund managers as entrepreneurs. the idea is that entrepreneurs should reap rewards from selling somebody something they built. others argue for closing the loophole, saying 20% is without a doubt income. in that case, the...

Should reap rewards from selling something they built with early capital and vision similar to a start-up. they put that capital in so they get a break on their taxes. but others, even those in the industry who think the loophole should be closed say that 20% is actually income. in that case the money would be taxed at a combined 43.4%. the reasoning behind that? these managers tend to be extremely wealthy. paying that 23.8% means their taxes are lower than the folks making 40 grand a year. they're usually paid based on how well a fund performs. closing the loophole would make these wealthy ma...

It's called the carried interest loophole. something we talk about regularly. let's tell people what we're talking about. >> a loophole that trump, mnuchin, and cohn all said would close. what is it? it's got nothing to do from carrying interest from year to year. it dates back to 18th century italy. would take a 20% cut on whatever they carried. fast forward to now. an investor pours money into an investment fund such as a private equity firm and that private equity firm makes money. usually in the multimillions. a lot goes back to the investor. but 20% goes back to e the fund manager. that 2...

That doesn't help. >> we took a step in reform on carried interest in regards to the three-year holding period. for those making long-term investments to get the benefit of -- and i believe in lower capital rates for investment return. you had a great segment on what is the difference between investment return and labor. i think that's where the heart is going to go. >> private equity firms and real estate firms don't have short-term investments. private equity firms have long-term locked up kcapital. that's how they operate. when president trump was on the campaign trail, gary cohn, steve mnu...