The budget proposal being hammered out by House Republicans is set to take health insurance away from millions of people and food out of the mouths of hungry children and families. But no request from the richest of the rich to reduce the taxes their businesses pay and increase their profits is too small to be granted. That, in a nutshell, is what this administration and Congress are all about – never mind the rhetoric about a new wave of Republican working class ‘populism.’

In recent weeks, President Trump professed an interest in raising taxes on the wealthy, and he even asked Congress to close the ‘carried interest’ loophole that lets PE investors pay a lower tax rate on earnings from selling companies in their portfolio at a profit. But nothing much materialized here – the carried interest loophole survived in the House version of the president’s ‘big beautiful bill.’ Not only that, PE firms could be getting a new tax break.

The latest insult to working people is a technical ‘fix’ to the definition of ‘earnings’ that businesses can use to increase the deduction they can take for the interest they pay on their debts. This reduces their taxes and increases their profits. Private equity firms, notorious for the amount of debt they use in leveraged buyouts (LBOs), lobbied hard for this additional tax break.

It works like this: Business are currently able to deduct up to 30 percent of measured earnings in interest expense from their taxable income. The more interest a business can subtract from its earnings, the lower its tax bill, and the higher the profits that go to its owners. Private equity is itching for a change in tax law that will let the companies they acquire in leveraged buyouts deduct more of the interest they pay. True to form, and very much in line with the way the PE industry operates, they are passing this tax break off as a technical fix to the accounting measure of income.

As we pointed out back in March, when this idea was first floated, PE wanted to change how earnings are measured. Currently the tax code uses earnings before interest and taxes, or EBIT. But there is another measure that typically provides a much higher assessment of a business’ earnings. That measure is earnings before interest, taxes, depreciation, and amortization are deducted, or EBITDA. The higher a company’s earnings, the more interest payments they can deduct. For private equity, which is well-known for using high levels of debt when it buys out companies, adding these two letters – DA – could raise tax deductions for the companies they own by up to 15 percent and boost the profits of those companies.

This is all very technical, but it is very important. This is a tax break estimated to be worth billions of dollars to the private equity industry. The Joint Committee on Taxation estimates that the addition of those two little letters will blow a $9.5 billion dollar hole in tax collections in 2025, and $73 billion from 2025 to 2034; Treasury has an even higher estimate of the 10-year hit to tax revenues of $179 billion.

Nearly every business has some debt on its books and will be able to take advantage of the tax break to pay lower taxes. But the real winners here, who would walk away with most of the tax savings, are the PE firms who will profit from forcing companies they buy into debt. The losers are regular people forced off of Medicaid or food stamps (now called SNAP) to pay for these tax breaks.