Sinema took money from Wall Street while eliminating taxes on investors

WASHINGTON (AP) — Sen. Kyrsten Sinema, the Arizona Democrat who single-handedly thwarted her party’s goal of raising taxes on wealthy investors, received nearly $1 million over the past year from private equity professionals, fund managers hedgers and venture capitalists whose taxes would have increased under the plan.

For years, Democrats have promised to raise taxes on those investors, who pay a significantly lower rate on their earnings than ordinary workers. But just as they neared that goal last week, Sinema forced a series of changes to his party’s $740 billion election-year spending package, eliminate a proposed “earned interest” tax increase in private capital gains while securing a $35 billion exemption that will save much of the industry from a separate tax increase that other large corporations now have to pay.

The note, with Sinema’s alterations intact, was delivered final approval by Congress on Friday and is expected to be signed by President Joe Biden next week.

Sinema has long aligned herself with private equity, hedge fund and venture capital interests, helping her raise at least $1.5 million in campaign contributions since she was elected to the House a decade ago. But the $983,000 she has raised since last summer was more than double what the industry gave her during all of her previous years in Congress combined, according to an Associated Press review of campaign finance disclosures.

The donations, which make Sinema one of the industry’s top beneficiaries in Congress, are a reminder of the way high-powered lobbying campaigns can have dramatic implications for the way legislation is made, particularly in the evenly divided Senate where there are no Democratic votes. to spare. They also highlight a degree of political risk for Sinema, whose unapologetic defense of the industry’s favorable tax treatment is seen by many in his party as indefensible.

“From their point of view, it’s a million dollars very well spent,” said Dean Baker, senior economist at the Center for Economic and Policy Research, a liberal-leaning think tank. “It is quite rare that you see this direct return on your investment. So I guess I would congratulate them.”

Sinema’s office refused to make her available for an interview. Hannah Hurley, a spokeswoman for Sinema, acknowledged that the senator shares some of the industry’s views on taxes, but she rejected any suggestion that the donations influenced her thinking.

“Senator Sinema makes every decision based on one criterion: what is best for Arizona,” Hurley said in a statement. “She has been clear and consistent for over a year that she will only support tax reforms and revenue options that support Arizona’s economic growth and competitiveness.”

Sinema’s defense of the tax provisions offers a jarring contrast to her background as a Green Party activist and a self-described “Prada socialist”. who once compared accepting campaign money to “bribery” and then called for “big corporations and the wealthy to pay their fair share” shortly before launching his first campaign for Congress in 2012.

She’s been much more magnanimous since then, praising private equity in 2016 from the House floor for providing “billions of dollars every year to Main Street businesses” and then interning at a boutique winery tycoon. private equity in Northern California during the 2020 congressional recess.

The surge in industry contributions to Sinema dates back to last summer. That’s when he first made it clear that he would not support an accrued interest tax increase, as well as other corporate and business tax increases, included in an earlier iteration of Biden’s agenda.

Over a two-week period in September alone, Sinema raised $47,100 in contributions from 16 high-ranking officials at the private equity firm Welsh, Carson, Anderson & Stowe, records show. Employees and executives of KKR, another private equity giant, contributed $44,100 to Sinema over a two-month period in late 2021.

In some cases, the families of private equity managers joined. David Belluck, a partner at the firm Riverside Partners, made a maximum contribution of $5,800 to Sinema on one day in late June. So did three of his college-age children, with the family collectively donating $23,200, records show.

“I generally support centrist Democrats and her seat is important to maintaining a Democratic majority in the Senate,” Belluck said, adding that her family has known Sinema since she was elected to Congress. “She and I have never discussed private equity taxes.”

The industry donations coincide with a $26 million lobbying effort spearheaded by investment firm Blackstone that culminated on the Senate floor last weekend. By the time the bill came up for debate during a marathon series of votes, Sinema had already forced Democrats to drop their interest-bearing tax increase.

“Senator Sinema said she would not vote for the bill … unless we killed it,” Senate Majority Leader Chuck Schumer told reporters last week. “We had no other choice.”

But after private equity lobbyists uncovered a provision in the bill that would have subjected many of them to a separate 15% corporate minimum tax, they urgently pushed Sinema and other centrist Democrats to make changes, according to emails. emails and four people with direct knowledge of the matter who requested anonymity to discuss the internal deliberations.

“Given the disruptive nature of this development, we need as many offices as possible that weigh the concerns of Leader Schumer’s office,” Blackstone lobbyist Ryan McConaghy wrote in an email last Saturday obtained by the AP, which included proposed language. to amend the bill. “Would you and your boss be willing to raise the alarm about this and voice your concerns with Schumer and the team?”

McConaghy did not respond to a request for comment.

Sinema worked with Republicans on an amendment that removed the bill’s corporate tax increase provisions, which a handful of vulnerable Democrats also voted on.

Liberal activists in Arizona say they plan to make Sinema’s reliance on donations from wealthy investors a campaign issue when he runs for re-election in 2024.

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Associated Press writer Josh Boak contributed to this report.

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