Private Equity Flexes Muscle in Washington as Warren Picks Fight

It was “Barbarians at the Gate,” Washington-style.

As Republicans set out to overhaul the federal tax code in 2017, the private equity world leveraged its influence. The mission: protect the wildly lucrative tax break that’s helped mint more billionaires than almost any other industry.

The original Barbarian—KKR & Co.—had none other than a former head of the Republican National Committee rounding up lawmakers on Capitol Hill to fight for private equity’s cause.

Quietly meeting with Treasury Secretary Steven Mnuchin and top economic advisers was industry mogul Jonathan Gray, the No. 2 at Blackstone Group Inc. who’s famous for ...