After Shielding Tax Loophole for Private Equity, Sinema Backs Senate Bill

Sen. Kyrsten Sinema announced late Thursday that she has agreed to back Democrats’ new reconciliation bill, but only after securing changes to a proposed levy on major corporations and forcing the removal of a provision targeting a notorious tax loophole exploited by rich investors.

In a statement, Sinema (D-Ariz.) said that she and the Democratic leadership agreed to strip out “the carried interest tax provision, protect advanced manufacturing, and boost our clean energy economy in the Senate’s budget reconciliation legislation.”

“Subject to the parliamentarian’s review, I’ll move forward,” said Sinema, a key holdout whose vote is necessary to pass the so-called Inflation Reduction Act, a roughly $740 billion bill that includes renewable energy investments, drug price reforms, health insurance subsidies, and giveaways to the fossil fuel industry, which were added to win the support of right-wing Sen. Joe Manchin (D-W.Va.)

While Sinema vowed to work toward “carried interest tax reforms” at a future date, her decision to tank Democrats’ latest attempt to limit the egregious loophole for private equity moguls and billionaire hedge fund managers likely means changes won’t be coming any time soon, given the close margins in the Senate and GOP opposition.

Democrats are reportedly planning to replace the carried interest provision—which was far weaker than progressives had hoped and would have left much of the loophole intact—with a tax on stock buybacks.

Sinema also won unspecified changes to the structure of the reconciliation bill’s proposed 15% corporate minimum tax, which was aimed at preventing large companies from dodging taxes by stashing profits overseas. Republicans falsely portrayed the minimum tax provision as a “dangerous” attack on “American manufacturing,” a line that seems to have swayed Sinema.

Originally published at Commondreams.org.