Sinema Received $1M Haul, Then Killed Tax Hike on Rich Investors

AP: Ariz. Dem saw big influx of cash over last year from private equity firms, hedge fund managers
By Newser Editors and Wire Services
Posted Aug 13, 2022 11:30 AM CDT
Sinema Received $1M Haul, Then Killed Tax Hike on Rich Investors
Sen. Kyrsten Sinema, D-Ariz., speaks during a Senate Finance Committee hearing Oct. 19, 2021 on Capitol Hill in Washington.   (Mandel Ngan/Pool via AP, File)

(Newser) – Sen. Kyrsten Sinema, the Arizona Democrat who single-handedly thwarted her party's longtime goal of raising taxes on wealthy investors, received nearly $1 million over the past year from private equity professionals, hedge fund managers, and venture capitalists whose taxes would've increased under the plan, per an AP review of campaign finance disclosures. For years, Democrats have promised to raise taxes on such 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 her party's $740 billion election-year spending package, eliminating a proposed "carried interest" tax increase on private equity earnings while securing a $35 billion exemption that will spare much of the industry from a separate tax increase other huge corporations now have to pay.

The bill, with Sinema's alterations intact, was given final approval by Congress on Friday and is expected to be signed by President Biden next week. Sinema has long aligned herself with the interests of private equity, hedge funds, and venture capital, helping her net at least $1.5 million in campaign contributions since she was elected to the House a decade ago. But the $983,000 she has collected since last summer more than doubled what the industry donated to her during all of her preceding years in Congress combined. The donations, which make Sinema one of the industry's top beneficiaries in Congress, serve as a reminder of the way that high-power lobbying campaigns can have dramatic implications for the way legislation is crafted, 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 viewed by many in her party as indefensible. Sinema's defense of the tax provisions offer a jarring contrast to her background as a Green Party activist and self-styled "Prada socialist" who once likened accepting campaign cash to "bribery" and later called for "big corporations [and] the rich to pay their fair share" shortly before launching her 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 each year to Main Street businesses" and later interning at a private equity mogul's boutique winery in Northern California during the 2020 congressional recess.

The soaring contributions from the industry to Sinema trace back to last summer. That's when she first made clear that she wouldn't support a carried interest tax increase, as well as other corporate and business tax hikes, included in an earlier iteration of Biden's agenda. Sinema's office declined to make her available for an interview. Spokesperson Hannah Hurley acknowledged the senator shares some of the industry's views on taxation, but she rebuffed any suggestion that the donations influenced Sinema's thinking. "Senator Sinema makes every decision based on one criteria: what's best for Arizona," Hurley said in a statement. Read much more here.

(Read more Kyrsten Sinema stories.)

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