Senator Kyrsten Sinema, the Arizona Democrat who single-handedly thwarted her party’s longstanding goal of raising taxes on wealthy investors, received nearly $1 million during the year latest from private equity professionals, hedge fund managers and venture capitalists whose taxes would have gone up under the plan.
For years, Democrats have promised to raise taxes on these investors, who pay a significantly lower rate on their earnings than ordinary workers. But just as they closed in on that goal last week, Sinema forced a series of changes to his party’s $740 billion election-year spending plan, eliminating a proposal to increase the tax on “deferred interest” on private equity income while securing a $35 billion exemption that will spare much of the industry from a separate tax hike that other large corporations now have to pay.
The invoice, with Sinema’s edits intact, has been delivered final approval by Congress on Friday and is expected to be signed by President 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 her election to the House a year ago. ten years. But the $983,000 she’s raised since last summer has more than doubled what the industry has given her in all her previous years in Congress combined, according to an Associated Press review of the disclosures. campaign finance.
The donations, which make Sinema one of the industry’s top beneficiaries in Congress, are a reminder of how high-level lobbying campaigns can have dramatic implications for how legislation is crafted, especially in the Senate. equally divided where there is no Democratic Party. voice to spare. They also highlight a degree of political risk for Sinema, whose unabashed defense of the industry’s favorable tax treatment is seen by many in his party as indefensible.
“From their perspective, 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 such a direct return on your investment. So I guess I would congratulate them.
Sinema’s office refused to release her for an interview. Hannah Hurley, a spokeswoman for Sinema, acknowledged that the senator shares some of the industry’s views on taxation, but dismissed any suggestion that the donations influenced her thinking.
“Senator Sinema makes every decision based on one criteria: what’s 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 tax provisions provides a stark contrast to her past as a Green Party activist and self-proclaimed ‘Prada socialist’ who once likened accepting campaign money to ‘bribery’ and then called on “big business and the wealthy to pay their fair share” shortly before launching his first campaign for Congress in 2012.
She’s been far more magnanimous since, praising private equity in 2016 from the House floor for providing ‘billions of dollars every year to high street businesses’ and later interning in a tycoon’s cellar of private equity in Northern California during the 2020 congressional recess.
The increase in industry contributions to Sinema dates back to last summer. It was then that she first made it clear that she would not support a tax increase on deferred interest, as well as other corporate and business tax increases. , included in an earlier version of Biden’s agenda.
In a two-week period in September alone, Sinema raised $47,100 in contributions from 16 senior executives at private equity firm Welsh, Carson, Anderson & Stowe, records show. Employees and executives of KKR, another private equity giant, paid $44,100 to Sinema over a two-month period at the end of 2021.
In some cases, the families of private equity managers have joined us. David Belluck, a partner at Riverside Partners, made a maximum contribution of $5,800 to Sinema 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 his seat is important to maintaining a Democratic majority in the Senate,” Belluck said, adding that his family knew Sinema from his election to Congress. “She and I never discussed the taxation of private equity.”
The industry donations coincide with a $26 million lobbying effort led by investment firm Blackstone that culminated in the Senate last weekend. By the time the bill was debated in a series of marathon votes, Sinema had already coerced Democrats into abandoning their carried interest tax hike.
“Senator Sinema has said she will not vote for the bill…unless we delete it,” Senate Majority Leader Charles E. Schumer told reporters last week. “We had no choice.”
But after private equity lobbyists uncovered a provision in the bill that would have subjected many of them to a separate 15% minimum corporate tax, they urgently pressed Sinema and other Democrats. centrists for changes, according to emails as well as four people with direct knowledge of the case who requested anonymity to discuss internal deliberations.
“Given the disruptive nature of this development, we need as many offices as possible to address the concerns of Chief Schumer’s office,” Blackstone lobbyist Ryan McConaghy wrote in an email obtained on August 6 by the AP, which included proposed language to amend the bill. “Would you and your boss be willing to sound the alarm about this and voice your concerns to Schumer and his team?”
McConaghy did not respond to a request for comment.
Sinema worked with Republicans on an amendment that removed the corporate tax increase provisions from the bill, which a handful of vulnerable Democrats also voted for.
Liberal activists in Arizona say they plan to make Sinema’s reliance on donations from wealthy investors a campaign issue when she is re-elected in 2024.