Should Mitt Romney pay more than 14%?

American private equity and hedge fund managers have done well despite the weak economy of the past decade. But are their millions, taxed at lower rates than earned income, justified by the creation of jobs and economic opportunities - or are they just enriching fund bosses like would-be President Mitt Romney?

“If you change the law, we’ll pay the taxes,” David M. Rubenstein, co-founder of Carlyle Group, one of the biggest US private investment firms, told the World Economic Forum, the annual gathering of Western financial and political elites in Davos, Switzerland. NYTimes report here.

"But don’t criticize (GOP Presidential candidate Mitt Romney) for paying the taxes that the law requires him to pay," Rubenstein added, according to Bloomberg here. Romney says he paid less than 14% of his $21M+ income to the federal government last year.

As Rubenstein noted, private equity investors pay lower taxes on fees they earn from investing money for pension funds and other clients, than middle-income workers and business owners pay.

Professional investors (like Gerry Lengler in NYTimes here) insist the law promotes investment and job creation and that businesses are fairly taxed at other levels; skeptics (like William D. Cohen in Bloomberg here) note the law has made fund managers rich, while failing to deliver similarly fat profits for their clients - including the pension funds.

According to NYTimes, "Rubenstein and other participants in a session sponsored by Time magazine said capitalism was under fire in the developed world. China’s state capitalism and its success in delivering rapid growth presents a challenge to the classic laissez-faire capitalism of Europe and America, they said.

“State capitalist societies seem to be able to do a better job creating jobs,” Rubenstein told the crowd. But who wants to work in a low-wage factory? he asked. These  "are not the kind of high paying jobs people in the developed world want.”

Rubenstein also said "America and Europe had a limited amount of time to build a better system" than the giant state-run corporatoins that dominate the economy in China and other fast-growing companies: “If we don’t do that soon, I think that we’ve lost the game in competing against emerging-market capitalism or state capitalism."