Romney's supporters are almost certainly wrong when they assert that Romney "already paid taxes on his ordinary income" and that now he's just risking his "capital."

This is because Mitt Romney has almost certainly taken advantage of one of the most outrageous tax loopholes in our entire tax code: The "carried interest" tax exemption.

This loophole allows money managers to structure the performance fees they are paid as "capital gains" instead of as ordinary income.

The loophole therefore allows money managers to avoid paying ordinary income taxes on their performance fees and then make much bigger bets than they would be able to make if they actually had to pay taxes on their earnings. When the money managers use very sophisticated tax shelters, it also allows them to defer paying taxes for years (if not decades)--and then only pay low long-term capital gains rates instead of ordinary income rates.

Although we don't know for certain that that's what Mitt Romney has done (because he won't release his tax returns), it seems highly likely that this is what he has done. And, in fact, the obvious unfairness of this tax loophole seems like one big reason he won't release his returns.