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Opinion | Private Equity Doesn’t Want You to Read This



This column has been updated.

This column is about the excesses of the private equity investment industry. It delves into the minutiae of the tax code, corporate structure and certain abstruse practices of financial engineering. There will be jargon: carried interest, leveraged buyout, joint liability. I am aware that none of this is anyone’s favorite thing to be discussing on a summer’s day.

But private equity is counting on your lack of interest; the seeming impenetrability of its practices has been called one of its “superpowers,” among the reasons the trillion-dollar industry keeps getting away with it.

With what? An accelerating, behind-the-scenes desiccation of the American economy. Democrats in the Senate were poised to pass a rule that might slightly clip the industry’s wings — a change to the tax code that would force partners in private equity firms, hedge fund managers and venture capitalists to pay a fairer share of taxes on the money they make.

I can’t fathom what her reluctance might be. One of private equity’s main plays is the leveraged buyout, which involves borrowing huge sums of money to gobble up companies in the hopes of restructuring them and one day selling them for a gain.

But the acquired companies — which range across just about every economic sector, from retailing to food to health care and housing — are often overloaded with debt to the point of unsustainability. They frequently slash jobs and benefits for employees, cut services and hike prices for consumers, and sometimes even endanger lives and undermine the social fabric.

It is a dismal record: Private equity firms presided over many of the largest retailer bankruptcies in the last decade — among them Toys “R” Us, Sears, RadioShack and Payless ShoeSource — resulting in nearly 600,000 lost jobs, according to a 2019 study by several left-leaning economic policy advocates.

Other investigations have shown that when private equity firms buy houses and apartments, rents and evictions soar. When they buy hospitals and doctors’ practices, the cost of care shoots up. When they buy nursing homes, patient mortality rises. When they buy newspapers, reporting on local governments dries up and participation in local elections declines.

It is unclear even if private equity pays off for the investors — like university endowments, public pension funds and wealthy individuals — who put money into the industry in the hopes of outsize returns. Since at least 2006, according to a study by the economist Ludovic Phalippou, the performance of the largest private equity funds has essentially matched returns of comparable publicly traded companies.


Still, the industry has been growing quickly, and it had a record year in 2021. According to McKinsey, private equity’s total assets under management reached almost $6.3 trillion last year. The American Investment Council, a trade group representing the industry, says that companies backed by private equity firms employ nearly 12 million Americans.

With the help of lax regulation and indefensible tax loopholes, private equity’s apparent destructiveness can be enormously profitable for its partners. Private equity firms make money by extracting hefty fees from their investors and from the companies they purchase, meaning they can succeed even if their investments go kaput. Phalippou found that between 2005 and 2020, the industry produced 19 multibillionaires.

“It’s a heads-I-win, tails-you-lose model,” said Jim Baker, the executive director of a watchdog group called the Private Equity Stakeholder Project.

But it gets worse: Not only do private equity partners make money even if their companies blow up; they also get a pretty good deal from the government on what they earn. Private equity funds generally charge their investors two different fees: a management fee of 2 percent of invested assets per year (funds are held for an average of about six years), and a “carried interest” fee that is 20 percent of any investment gains realized in the fund.

In most other industries, the Internal Revenue Service would categorize a fee like carried interest as ordinary income (like how your salary is taxed) rather than a capital gain (like how your stock market winnings are taxed). After all, the partners are receiving the fee as compensation for performing a service (managing investors’ money), not collecting a gain on their own invested capital (because it’s the investors’ money, not theirs).

But that’s not how it works for partnerships like private equity, hedge funds and venture capital firms. Under I.R.S. guidelines, carried interest is taxed as a capital gain, which has a top rate of 20 percent, rather than as income, which has a top rate of nearly 40 percent. The upshot: Millionaire and billionaire partners in private equity firms pay a far lower tax rate on much of their income than many of the rest of us.

The private equity industry defends its preferential rate by citing “sweat equity” — even if partners don’t put much of their own capital at stake, they are being rewarded for investing their “ideas and energy,” as Steve Klinsky, a former chair of the American Investment Council, put it in a recent article. But it’s difficult to find many beyond the industry who will defend carried interest’s low taxation.

Barack Obama called for the loophole to be eliminated. Donald Trump pledged to eliminate it. So did Joe Biden. Even several financial tycoons have called for its repeal — Jamie Dimon, Bill Ackman and Warren Buffett among them.

Despite widespread opposition, though, the tax break has somehow endured — as Tim Murphy wrote recently in Mother Jones, it has been “the most unkillable bad idea in a town with no shortage of them, a testament to the unstoppable combination of money and inertia.” (Murphy’s piece was part of an excellent, multipart investigation of the private equity industry published by the magazine.)

The Democrats’ proposal would have merely narrowed — but would not have eliminated — the carried interest loophole. Passing it would have been a good start toward reforming the private equity industry.


Even if it passed, though, much more would need to be done. Eileen Appelbaum, an expert on the private equity industry who is a co-director of the Center for Economic and Policy Research, a liberal think tank, told me she favored many of the ideas in the Stop Wall Street Looting Act, a bill introduced last year by Senator Elizabeth Warren and several other liberal Democrats. The act would impose lots of new rules on the industry, including limiting tax deductions on excessive debt and adding worker protections for when debt binges lead to bankruptcy.

One of the most important ideas, Appelbaum said, is known as joint liability, which would hold private equity firms responsible for the debt incurred by portfolio companies if the companies go belly up.

“It doesn’t tell you how much debt you can put on it,” Appelbaum said. “It just says, ‘whatever debt you put on it, you’re going to be jointly responsible.’”

That struck me as an elegant and sensible idea. If private equity firms claim they should get credit for their “sweat equity,” why shouldn’t they be held responsible when the sweat turns to tears?

Farhad wants to chat with readers on the phone. If you’re interested in talking to a New York Times columnist about anything that’s on your mind, please fill out this form. Farhad will select a few readers to call.

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A journalist since 1994, he also founded DMGlobal Marketing & Public Relations. Glover has an extensive list of clients including corporations, non-profits, government agencies, politics, business owners, PR firms, and attorneys.

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EDITORIAL: BlackUSA.News’ Doni Glover Show on Nominated for Emmy by CCG



By Doni Glover

(BALTIMORE – February 14, 2023) – I do not brag about BlackUSA.News, the voice of our people; but, maybe I should. It is essential, in my best estimation, to simply do the work. The accolades will come, I believe. And they have. On February 1st, the Doni Glover Show was nominated for an Emmy by Career Communications Group (CCG). And for this, I am truly humbled and grateful.

Kudos to Dr. Tyrone Taborn, Jean Hamilton, and the entire CCG team. They are just returning to regular life after last weekend’s 37th year of BEYA – or the Black Engineer of the Year Awards. As always, this mega-event features generals, admirals, scientists, inventors, and most importantly, students. Further, while this event started in Baltimore, it has since been held in Washington, D.C.; next year, it will return to Baltimore.

I was reminded today during an interview with Edwin Avent of the Baltimore Collegiate School for Boys of just how impactful CCG is. Dr. Taborn has been combatting digital apartheid his entire career. Too many of us do not even know who he is.

Well, I can tell you he is, among other things, the biggest supporter of and BlackUSA.News. While BMORENews enjoys a 20-year reputation of covering “the news before the news”, BlackUSA.News is a 2½-year-old baby that came about amidst the pandemic.

Additionally, Dr. Taborn put the Doni Glover Show on his Metaverse platform,, and he hired me to serve as news director.

I call it our “COVID pivot”. We found that providing news coverage drastically changed after the pandemic hit and we needed an innovative way of keeping our coverage viable.

Today, we can state that we have streamed LIVE with hosts in New York, Baltimore, Washington, D.C., Charlotte, Atlanta, Miami, L.A., and Oakland. This effort has been tremendously illuminated thanks to Dr. Taborn. We are ever so grateful that he embraced our vision and found it worthy of his support.

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Timothy and Feather – An Urban Tale



(Montgomery Village, Maryland – November 18, 2022) – Timothy was perched on a tree limb, watching the hawk fly circles in the sky. It was a beautiful sight. Timothy had always been fascinated by the bird. He admired its’ grace and power. And it was his mission to catch this hawk!

Then, without warning, the hawk swooped down at its future owner, Timothy, who quickly ducked out of the way, but not before getting gashed, on the back, by the hawk’s talons. The hawk crashed to the ground with a thud, tangled in Timothy’s net.

Timothy couldn’t believe his luck! He had captured his very own hawk! Now he would be able to train it to be his personal pet.

He took Feather, the hawk, home and started to train her how to obey commands. She was a quick learner and soon they were working together like a well-oiled machine. They fought crime in their small town in Mississippi and saved many people from danger.

Townspeople began to come up with a name for the duo.


If you’re reading this story, if you have a name for the tag team duo, email me at

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5 Ways to Attract Community Grants



Attracting community grants is essential for any non-profit organization, and Baltimore-based organizations are no exception. To attract community grant funds, Baltimore-based non-profits should focus on five key strategies: Outreach and Networking, Research and Writing, Proposal Development, Budget Preparation, and Evaluation.

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