Private equity funds are private investment vehicles used to pool investment capital that is usually provided by a small group of limited partners. Critics claim the managers of these investment pools buy targeted companies, cut some jobs and offshore others, pile on debt and walk away with huge profits that are hardly taxed. Often, employees who contributed to pension funds over decades of employment find themselves in poverty after leveraged-buyout firms walk away from pension liabilities. Supporters claim these funds create jobs and value which benefit many pension funds, university endowments and other investment pools that serve ordinary people. They say that some equity funds make long-term investments in the firms they buy to produce better, more efficient companies.

Equity funds are subject to favorable regulatory treatment in most jurisdictions from which they are managed and this allows them to minimize the tax burden on their investors and managers. The income from private equity funds is taxed as a capital gain rather than as normal income. The maximum tax rate for capital gains is 20%, compared to the 37% marginal income tax rate that people pay. Critics claim private equity managers are using a loophole to avoid paying their fair taxes on what is actually a salary, and this is costing our Treasury many millions of dollars each year.

Pending Legislation: H.R.2686 - Ending Wall Street Tax Giveaway Act
Sponsor: Rep. Bill Pascrell (NJ)
Status: House Committee on Ways and Means
Chairperson: Rep. Jason Smith (MO)