October marks the start of “spooky season,” and congressional Democrats are once again trying to cast private equity as a vampire draining the economy. But the facts tell a very different story. Private equity invests hundreds of billions of dollars in businesses across the country, supports job creation, and provides companies with the capital and expertise they need to grow, compete, and thrive. America and its workers would be worse off if not for this industry.
Unfortunately, some Democrats want to essentially throttle the American economy by reining in private equity. A handful of far-left legislators recently introduced their resurrected “Stop Wall Street Looting Act,” which is another attempt to completely rework an entire industry in a progressive image. It’s a Frankenstein’s monster that bestows special privileges to unions, opens the door to costly class action litigation, attacks the tax structure of all Real Estate Investment Trusts (REITs), and places onerous limits on capital distribution for all private equity firms, among many other problematic provisions.
Additionally, the bill applies a 100% surtax on certain fees paid by target firms to private fund managers. A 100% tax rate is punitive and confiscatory. It’s an idea straight out of Venezuela.
On the regulatory side, the bill would hold private equity firms liable for all debts, legal judgments, and pension obligations of their portfolio companies—a concerning and unprecedented step. Further, it would effectively rewrite bankruptcy law with new rules and regulations when a private equity-owned company goes bankrupt. Section 302 adjusts the priority structure for creditor payments by reclassifying severance and employee benefit plans as administrative expenses.
While the aim of the bill is to force “Wall Street fat cats” to pay a higher rate, the tax increase would ultimately be passed on to middle-class investors. Funds would simply pass along these higher expenses in the form of higher service charges to their clients, which could suppress realized returns. In some cases, the additional regulatory burdens would make it prohibitive for private equity to invest in solutions to turn businesses around. The irony is that, without cash injections from private equity companies, many businesses would fail sooner, leaving employees out in the cold.
There’s no doubt that “private equity” have become dirty words and the industry is often painted as the villain. In 2024, private equity-backed businesses directly employed 13.3 million Americans, generated approximately $2 trillion in U.S. GDP, and paid $337 billion in federal, state, and local taxes, according to an EY analysis. That’s real value that is helping to support the American economy.
The vast majority of private equity-backed businesses are also small businesses—about 85% employ fewer than 500 workers—that helps Main Street, not just Wall Street.
In 2024, NTU called this misguided bill a clear example of legislative overreach. Those words are still true today. At the time, we highlighted a few examples about how private equity helped hospitals and the general health care industry better serve their patients and deliver more care options across the country.
As we wrote then, “Private equity is often treated as a punching bag in the media, but these firms regularly help turn private firms around, helping unlock value and large investment returns in these companies. These strong returns can increase the quality of life of retirees thanks to healthy pension plans or provide quality education to first time university students thanks to college endowments.”
Rather than turning private equity into a political boogeyman, Congress should recognize the important role it plays in fueling investment, supporting workers, and helping businesses grow. The Stop Wall Street Looting Act may be dressed up as a crackdown on Wall Street, but its consequences would reach far beyond wealthy investors, ultimately affecting workers, retirees, small businesses, and everyday Americans.
As the American economy continues to grow, fueled by President Trump’s pro-growth tax cuts and deregulation, demand for investment will only increase. Policymakers should be tearing down barriers to capital formation—not building new ones. If Democrats are looking for a real economic monster this October, they should look elsewhere. Private equity isn’t it.