Siding With ‘Private Equity Buddies,’ Sinema Targets Corporate Tax Provisions

As Senate Democrats work to finalize their new reconciliation package, corporate-friendly Sen. Kyrsten Sinema is reportedly demanding the removal of language taking aim at a notorious tax loophole that primarily benefits rich private equity investors and billionaire hedge fund managers.

Politico reported Wednesday that the Arizona Democrat—a major recipient of private equity campaign cash—”wants to nix language narrowing the so-called carried interest loophole,” which allows some ultra-wealthy executives to pay a lower tax rate than ordinary employees.

Sinema also wants “roughly $5 billion in drought resiliency funding added to the legislation, a key ask for Arizona given the state’s problems with water supply,” Politico noted.

The carried interest provision of the reconciliation package would raise an estimated $14 billion in federal revenue over a decade by subjecting more of the income of wealthy investors to a tax rate higher than the 20% long-term capital gains rate.

But Sinema has repeatedly opposed reforms to the carried interest loophole, and last year she helped secure the removal of carried interest changes from the now-dead Build Back Better Act.

Sen. Joe Manchin (D-W.Va.), who negotiated the new Inflation Reduction Act, has said he is “adamant” about keeping the carried interest change in the legislation, setting up a potential conflict between the party’s two right-wing obstructionists as Democrats attempt to pass the bill this week.

Robert Reich, the former secretary of the U.S. Department of Labor, noted Wednesday that “Wall Street has donated over $2 million to Sinema since she took office in 2017.”

“Looks like they are getting a huge return on their investment,” Reich added.

According to Bloomberg, Sinema is also pushing Democratic leaders to “narrow” the 15% corporate minimum tax proposed in the new legislation. The Tax Foundation estimates that the provision, which Manchin has endorsed and vocally defended, would raise $200 billion in federal revenue over a decade, helping to fund a significant chunk of the roughly $740 billion reconciliation package.

Bloomberg pointed out that “the changes Sinema is seeking could end up shaving tens of billions—or more—of revenue from the bill.”

“That would likely mean that Democrats would have to cut into some of the roughly $300 billion worth of deficit reduction in the bill,” the outlet noted, “or trim some of the spending on climate and health initiatives.”

Originally published at Commondreams.org.