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His results call into question the wisdom of the proposed legislation. At most, a carried interest tax may generate $3.2 billion in annual revenue, wrote Knoll in his widely quoted essay, “The Taxation of Private Equity Carried Interests: Estimating the Revenue Effects of Taxing Profit Interests as Ordinary Income.” The essay was posted on August 16 on the web site of the Social Science Research Network (www.ssrn.com) and caught national attention, being cited by such sources as the The Wall Street Journal and The New York Times.

Revenue of $3.2 billion may seem sizeable to the average taxpayer, but it is a drop in the budgetary bucket lawmakers are trying to fill. Equally significant, Knoll wrote, is that buyout and venture-capital firms could design ways around any new tax laws aimed at their executives.