With Sinema Opposing Tax Hikes for Rich, Progressives Say Carried Interest Provision Must Stay in IRA

Sen. Kyrsten Sinema has not said yet whether she will support the Inflation Reduction Act, the $739 billion package hammered out by Sen. Joe Manchin and Senate Majority Leader Chuck Schumer and announced last Thursday.

As she reviewed the 725-page bill over the weekend, reports suggested she is likely to object to a $14 billion provision taking aim at the preferential tax rates for wealthy investors—who make up a large portion of her donor base.

Sinema (D-Ariz.) has long objected to the closure of the carried interest loophole, which pertains to the percentage of profits hedge fund managers keep from investments. The profits are taxed at a rate of about 20% compared to the 37% top tax rate for ordinary income.

The bill would not entirely close the loophole but would lengthen “the amount of time that you have to hold the investment for it to qualify as a capital gain,” as former Biden administration tax official Kimberly Clausing told Business Insider on Saturday. The provision would make it harder for wealthy investors to benefit from the loophole.

Sinema counts private equity firms among her top contributors, with the securities and investment sector donating more than $2.2 million to her since 2017, according to OpenSecrets.

According to Axios, Sinema has indicated she is “open to letting Republicans modify the bill” as the GOP plans to “attempt to kill the reconciliation package with poison pills,” further weakening a package which already mandates oil and gas leasing in Alaska and the Gulf of Mexico and severely limits the authorization of new wind or solar energy development, angering climate campaigners.

Originally published at Commondreams.org.