The private equity industry has been given a boost after Republican senators blocked plans to hit companies with a 35% capital gains tax rate.

The decision will be seen as a key victory for the industry because private equity companies will avoid an extra $6bn (£2.9bn) in taxes for which they would have been liable if the proposals had been pushed through.

The tax increase was put forward by Charles Rangel, a Democrat Congressman, but the move, which needed the approval of 60% of the Senate was shot down after Republican senators blocked it.

Private equity companies had argued that since the bulk of employees' pay packets came from investment profits, any change to the carried interest regime would have a significant impact.

Further reading:

Private equity gets the policeman it deserves