N.Y. Officials Investigate Private Equity Firms

At least a dozen private equity firms are being investigated over their use of a questionable tax strategy, according to The New York Times. The state's attorney general is looking into whether the firms converted fees for managing funds into investment income — allowing it to be taxed at a much lower rate.

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STEVE INSKEEP, HOST:

NPR's business news starts with a subpoena.

At least a dozen private equity firms are being investigated by New York State over their use of a questionable tax strategy.

DAVID GREENE, HOST:

And among the firms being subpoenaed is Bain Capital, the company founded by Republican presidential candidate Mitt Romney.

The New York Times reports the state's attorney general, a Democrat, is looking into whether the firms converted fees for managing funds into investment income, allowing it to be taxed at a much lower rate.

INSKEEP: Experts have mixed views of this tax strategy. The paper reports that some call it aggressive, others say it's potentially illegal.

Romney's campaign issued a statement that argued the tactic is, quote, "common and totally legal," but noted that the candidate did not benefit from it in his own investments.

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