Doug Lowenstein, who runs the Private Equity Council, the industry's lobby group, says that the tax change could wreck buy-out shops by discouraging young talent from going into private equity and driving buy-out firms to relocate to countries that offer more favourable tax treatment.

ECONOMIST: Private-equity firms battle to keep their tax perks

"The private equity industry has a compelling story to tell, " says Robert Stewart, vice president of the Private Equity Council.

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