Hedge Fund Management - The Carried Interest Principle

Hedge funds are set up as partnerships, not a company which means that they are technically not a separate legal entity from their partners. This is called the Carried Interest Principle or loophole depending on who you ask and it means that hedge fund managers often pay a lower percentage of tax than the janitor that cleans their office at the end of the day. So this is morally questionable but who cares, you are going to be rich, let's go find some investors and hold up their tiger.