Under Herman Cain's 9-9-9 tax plan, the managers of private equity funds--one of the most lucrative financial structures on Wall Street--would pay, on average, an income tax rate of just around 6 percent.

That's less than the 9 percent rate most workers would pay, and it's a huge dropoff from the best assessment of the tax rate for private-equity fund managers under the existing tax code, which is around 29 percent.

An accountant with the American Institute of CPAs prepared an analysis on Friday, at the request of Yahoo News, that found that Warren Buffett would likely pay no income taxes under Cain's 9-9-9 plan. But the plan would be almost as kind to those who run private equity funds. They would pay "a very, very small effective rate," Robert Willens, a tax adviser to financial firms and a former managing director at Lehman Brothers, told The Lookout.

Private-equity funds like The Carlyle Group and The Blackstone Group--whose billionaire manager, Stephen Schwarzman, threw himself a $3 million 60th birthday bash in 2007 that made him a poster boy for Wall Street excess--have boomed over the last decade, generating huge profits. They've been helped by a quirk of the tax code.

In a typical private-equity fund, the managers are paid about 2 percent of the firm's assets as a managing fee, plus 20 percent of the fund's profits--the "2 and 20" standard. But they pay income tax only on the 2 percent managing fee. The fund's profits are reported as "carried interest," which count as long-term capital gains. Under the current tax system, those gains are taxed at a rate of just 15 percent.

Under Cain's 9-9-9 plan, which has helped push him to the top of several polls of the 2012 Republican presidential field, long-term capital gains would not be taxed at all.

President Barack Obama and others have argued, amid concern over the deficit and widespread popular anger at the financial sector, that private-equity fund managers should be paying more, not less, in taxes.

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When Obama floated the idea of closing the carried-interest loophole last year, Blackstone Group's Schwarzman likened the move to Hitler's invasion of Poland. (Schwarzman later apologized for the analogy.)

A careful and well-regarded academic study of 250 private-equity funds, conducted last year by the business school professors Andrew Metrick of Yale and Ayako Yasuda of the University of California, Davis, estimated that private equity managers, on average, claim one-third of their personal income as carried interest on their tax returns.

So under Cain's plan, which imposes a flat 9 percent income tax on everyone, private-equity managers would pay a 9 percent rate on the 66.7 percent share of their earnings that are subject to income tax. That comes to 6 percent of their total income, a reduction of almost 80 percent from the roughly 29 percent rate that Metrick and Kasuda's finding indicates they're currently paying.

Cain's plan lacks specifics, so it conceivably could involve closing the carried interest loophole. Asked by The Lookout whether Cain would continue to treat carried interest as a capital gain, a spokesman for the campaign pledged to respond, but did not do so before deadline.

"Will get back to you on carried interest," Rich Lowrie, Cain's top economic adviser and the man who helped devise the 9-9-9 plan, wrote in a subsequent e-mail to The Lookout.

Like private equity funds, hedge funds can report much of their profits as capital gains. But a larger share of their profits are short-term capital gains, which unlike long-term capital gains are taxed as regular income. So hedge funds don't benefit as much as do private equity funds from the carried-interest loophole, Robert Willens said.

Cain has not said whether his plan would change the tax treatment of short-term capital gains.

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