Kyrsten Sinema, a Democrat from Arizona, who single-handedly thwarted his party’s long-term goal of raising taxes on wealthy investors, received nearly $1 million in the last year from private equity professionals, hedge fund managers, and venture capitalists whose taxes would have increased under the scheme.
Over the years, Democrats have pledged to raise taxes on such investors who pay significantly lower rates on their earnings than ordinary workers. But it was only when they closed in on this goal last week that Sinema was forced to make a series of changes to his party’s $740 billion election-year spending package, abolishing the proposed “carrying interest” tax increase on private equity income, while securing a $35 billion waiver that would save most of the industry from a separate tax increase.
The bill was given final permission by Congress on Friday and is likely to be signed by President Joe Biden next week.
Sinema has long associated itself with private equity, hedge funds, and venture capital interests, which have helped at least $1.5 million in campaigning since being elected to the House a decade ago. But the $983,000 he’s raised since last summer is more than double what the industry donated to him during all his previous years in Congress, according to an Associated Press review of the campaign’s financial disclosures.
This donation, which makes Sinema one of the industry’s top beneficiaries in Congress, is a reminder that high-powered lobbying campaigns can have dramatic implications for the way legislation is enacted, especially in an evenly divided Senate where there are no Democratic votes left. He also highlights a degree of political risk to Sinema whose industry-friendly tax treatment’s uncertain defense is seen by many in his party as unforgivable.
“From their vantage point, those one million dollars is very well spent,” said Dean Baker, a senior economist at the Center for Economic and Policy Research, a liberal-leaning think tank. “You rarely get to see this direct talk of the return on your investment. So I think I will congratulate them.”
The Sinema office refused to make him available for interviews. Sinema’s spokeswoman, Hannah Hurley, acknowledged that the senator had some views of the industry on taxation, but denied any suggestion that Dan affected her thinking.
“Senator Sinema makes every decision based on one criterion: what’s best for Arizona,” Hurley said in a statement, adding that they have been clear and consistent over a year that they will only support tax reform and revenue options that support Arizona’s economic growth and competitiveness.”
The American Investment Council, a trading group lobbying on behalf of private equity, also defended its push to beat the tax provisions.