Taxes are for the little people

If your eyes glaze over at “carried interest loophole,” wait’ll you hear about “fee waivers.”

Cory Doctorow
8 min readJun 15, 2021


If you wanna do crimes, make them incredibly complicated and technical. Like the hustlers that came into the bookstore I worked at and spun these long-ass stories about why they needed money for a Greyhound ticket home.

Those guys shoulda studied the private equity sector.

Private equity’s playbook is to borrow giant sums by putting up other peoples’ companies as collateral (yes, really). Then they use that money to buy the company they mortgaged, and pay themselves a huge dividend.

Then they sell off the company’s assets and pay themselves even more money. That leaves the company in a state of precarity — assets they once owned, like their buildings, they now rent. If the rent goes up, they have to find the money to cover it.

All of this forms a pretense for mass layoffs, defaulting on pension obligations, lowering product quality, stiffing suppliers and borrowing more money. If the company doesn’t go bust, the PE looters can flip it to another PE company, that does it again.

Whenever you see something really terrible happening to a business that once offered useful products and services and paid decent wages, it’s a safe bet that PE is behind it. Toys R Us, Sears, your local hospital — and that memestock favorite, AMC.

Private equity goons make their money in two ways: the first is by pocketing 20% of these special dividends and other extractive policies that hollow out business.

This is money at PE managers get paid for spending their investors’ money. It’s a wage, in other words.

But thanks to the “carried interest” loophole (a hangover from 16th-century sea captains that has nothing to do with “interest” on loans), they get to treat these wages as “capital gains” and pay far less tax on them.

The fact that we give preferential tax treatment to capital gains (money derived from gambling), while taxing wages (money derived from doing useful work) at higher rates really tells you…



Cory Doctorow

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