Is carried interest back on the table? The idea of ending what some now call the "carried interest" loop hole has  ebbed and flowed over the last four or five years, and it is now once again flowing through Congress, stirring controversy as it always does.

To some, the idea that managers of alternative investment funds--such as hedge funds and private equity funds--pay the long-term capital gains rate on their 20 percent performance fee instead of the normal personal income tax rate of say 35 percent is unconscionable. Here's how one expert characterized the issue to the New York Times: "The carried interest loophole represents everyone's worst fear about the tax system--that the rich and powerful get away with murder."

Indeed, it made for a great populist issue back when financial firm-bashing was a vogue sport. The issue has cropped up again in on-going budget debacle in Washington, as one of issues blocking the passage of debt ceiling deal. Both sides are digging in. For the alternative investment industry, the issues do not get much bigger.

Fortune has weighed in with an article that firmly supports taxing performance fees at the higher personal rate. No matter what you think, you can be sure that passions will be aroused on both sides as this heats up. Fairly or not, it will be portrayed most likely as another Main Street vs. Wall Street issue. 

For more:
- here's the Times article

Related articles:
Bonus season: How will banks adjust to tax hikes?  
Taxes on carried interest to finally rise?