In the gilded realms of private equity, where mega deals and mega paydays beckon, the masters of leveraged buyouts are feeling a little put out.

From Park Avenue to Palm Beach, the conversation keeps turning to the same uncomfortable subject: an onslaught of taxes and the closing of the Billionaires’ Loophole.

After years of idle threats, Washington is talking seriously about ending the tax break that has helped private equity become one of the most lucrative corners of U.S. finance. Adding to the injury, other taxes on income and capital gains would also rise.

Private-equity types are, predictably, outraged.

For wealthy people like them, going after carried interest—basically, their cut of the profits—strikes many as anti-business, if not anti-American.

Some are expecting the changes to prompt early retirement. Others are quitting New York for no-income-tax Florida. One is dreading telling his kids he’s moving the family to Puerto Rico; he hired an attorney to look into the logistics. Another, straight-faced, likens the developments to—his term—reverse discrimination.

Over the top, maybe. But a lot of money is at stake.

The Internal Revenue Service characterizes carried interest as capital gains, rather than ordinary income. That’s the difference between paying the 23.8% total investment rate, including a levy that funds Obamacare, versus the 37% rate for salaries and wages.

But now the Biden administration wants to label both as ordinary income, effectively doubling the capital gains tax for the highest earners, and meaning that profitable perk—the Billionaires’ Loophole—might vanish at last. The combo of rising income and capital gains taxes, scrapping the carried interest break, and paying additional state and local taxes could push total levies for some to 60%.

And the proposed changes may come on top of more scrutiny. A Treasury Department report released Thursday estimated that wealthy taxpayers as a group are hiding billions of dollars of income, bolstering the Biden administration’s call for Congress to approve expanded IRS funding.

A decade ago, private-equity billionaire Stephen Schwarzman likened the mere possibility of raising taxes on his industry to Adolf Hitler invading Poland in 1939. (Schwarzman later apologized for the remark. He declined to comment for this story).

If President Joe Biden gets his way, hedge funders would get pinched, too, but not as much as private equity. Scrapping the carried interest loophole could raise an estimated $15 billion from the wealthy over 10 years, according to a congressional committee.

A big spender in Washington, private equity has beaten back the taxman before and was spared under President Donald Trump. This time feels different, however. Industry insiders say they’re growing increasingly resigned to the prospect of paying more in taxes. For obvious reasons, few want to be quoted by name.

Private equity’s formidable Washington lobby, the American Investment Council, is willing to talk. It’s working to convince members of Congress to protect the industry’s interests.

“During this economic recovery, why would you try to do anything that would thwart the ability of private capital and the incentives for continued investment,” says AIC president Drew Maloney. “You’re going to have a group of policy makers that don’t want to disrupt that.”

He goes on: “At the end of the day, private equity wants to be consistently treated with capital gains, and let’s see how that flows and the debate unwinds.”

The dollar signs tell the story. Take Blackstone Group Inc.’s Schwarzman, perhaps the industry’s biggest name. Last year, he earned $78 million in “carry” including securities he could sell later on—the bulk of his compensation—and $524 million in dividends on his stake in Blackstone. Under the Biden plan, his carry take would shrink to $44 million and his dividend pay would fall to about $300 million. And then all of that would be whittled down even more by city and state taxes.

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