Private Inequity: How a Powerful Industry Conquered the Tax System

The I.R.S. almost never audits private equity firms, even as whistle-blowers have filed claims alleging illegal tax avoidance.

There were two weeks left in the Trump administration when the Treasury Department handed down a set of rules governing an obscure corner of the tax code. Overseen by a senior Treasury official whose previous job involved helping the wealthy avoid taxes, the new regulations represented a major victory for private equity firms. They ensured that executives in the $4.5 trillion industry, whose leaders often measure their yearly pay in eight or nine figures, could avoid paying hundreds of millions in taxes. The rules were approved on Jan. 5, the day before the riot at the U.S. Capitol. Hardly anyone noticed.