Sen. Sinema’s Wall Street donations soared as she got Dems to kill tax on investors in $740B spending spree

While denying Democrats the tax increase on wealthy investors they desperately wanted as part of the Schumer-Manchin $740 billion spending package, Senator Kyrsten Sinema (D-Ariz.) was, over the past year, receiving nearly $1 million in donations from the very people whose taxes would have gone up under the original bill: hedge fund managers, private equity professionals, and venture capitalists.

“We have agreed to remove the carried interest tax provision, protect advanced manufacturing, and boost our clean energy economy in the Senate’s budget reconciliation legislation,” Sinema said in a statement following the negotiations. “Subject to the Parliamentarian’s review, I’ll move forward.”

Last week, on the Senate floor, Sinema again lightened the load on the private equity industry, when she assisted Republicans in their effort to secure a $35 billion exemption that will allow much of the industry to dodge a separate tax increase that will now be imposed on other huge corporations, the Daily Mail reports.

While Sinema has long sided with the interests of private equity, hedge funds, and venture capital, the Associated Press reviewed the senator’s campaign finance disclosures and found that the $983,000 she has raked in since last summer is more than twice what the industry donated to her over all the years she has been in Congress — combined.

“The donations, which make Sinema one of the industry’s top beneficiaries in Congress, serve 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,” the Daily Mail notes.

They could also make Sinema the target of many in her party who see her favorable stance on the industry as indefensible.

According to Dean Baker, a senior economist at the liberal-leaning think tank, the Center for Economic and Policy Research, the industry received great value for its money.

“From their vantage point, it’s a million dollars very well spent,” he said. “It’s pretty rare you see this direct of a return on your investment. So, I guess I would congratulate them.”

The surge in donations to Sinema started last summer when she stated she wouldn’t be supporting certain corporate and business tax increases or a carried tax increase.

Sixteen high-ranking execs from the private equity firm Welsh, Carson, Anderson & Stowe reportedly gifted Sinema with $47,100 in contributions over a two-week period in September, and an additional $44,100 flowed to the senator from another industry giant, KKR, over the course of two months in late 2021.

Even the family members of private equity managers were eager to show their support for the Arizona lawmaker.

After Riverside Partners’ David Belluck — himself a partner at the firm — maxed out his $5,800 contribution to Sinema in late June, three of his college-aged kids ponied up, bringing the family’s total contributions to $23,200.

But Belluck, who says his family has known Sinema since she was first elected to Congress, denies that it had anything to do with how private equity firms are taxed.

“I generally support centrist Democrats and her seat is important to keep a Democratic Senate majority,” he said. ‘She and I have never discussed private equity taxation.”

Sinema’s refusal to vote in favor of the Schumer-Manchin deal unless the carried interest tax increase was axed and the subsequent industry donations she received coincided with a $26 million lobbying effort led by the Blackstone investment firm that happened to culminate on the floor of the Senate last weekend.

Though it was already clear that Sinema would reject the carried interest tax, private equity lobbyists pressed Sinema and other centrist Democrats to change a provision in the bill they discovered that would have imposed a separate 15 percent corporate minimum tax on them, emails and four people with direct knowledge of the matter revealed.

In an email obtained by the Associated Press, Blackstone lobbyist Ryan McConaghy wrote, “Given the breaking nature of this development we need as many offices as possible weighing in with concerns to Leader Schumer’s office. Would you and your boss be willing to raise the alarm on this and express concerns with Schumer and team?”

Sinema appeared to comply, working with Republicans to strip from the bill the corporate minimum tax on private equity.

According to Hannah Hurley, a spokesperson for Sinema, the Senator’s actions were not in exchange for campaign donations, but have always been about what is best for the state she represents.

“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 policies, Hurley argued, have been consistent.

“Since she has been in Congress, Kyrsten has consistently supported pro-growth policies that encourage job creation across Arizona. Her tax policy positions and focus on growing Arizona’s economy and competitiveness are longstanding and well known,” she stated.

Still, liberal activists are vowing to make the contributions to Sinema’s campaign from wealthy investors an issue when she comes up for reelection in 2024.

“There are many takes on how to win, but there is no universe in which it is politically smart to fight for favorable tax treatment of the wealthiest people in the country,” said Emily Kirkland who works with progressive candidates as a political consultant. “It’s absolutely going to be a potent issue.”

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