Aug 05, 2022
Sen. Kyrsten Sinema announced late Thursday that she has agreed to back Democrats' new reconciliation bill, but only after securing changes to a proposed levy on major corporations and forcing the removal of a provision targeting a notorious tax loophole exploited by rich investors.
In a statement, Sinema (D-Ariz.) said that she and the Democratic leadership agreed to strip out "the carried interest tax provision, protect advanced manufacturing, and boost our clean energy economy in the Senate's budget reconciliation legislation."
"Because of her--and her alone--billionaire fund managers will keep 'getting away with murder.'"
"Subject to the parliamentarian's review, I'll move forward," said Sinema, a key holdout whose vote is necessary to pass the so-called Inflation Reduction Act, a roughly $740 billion bill that includes renewable energy investments, drug price reforms, health insurance subsidies, and giveaways to the fossil fuel industry, which were added to win the support of right-wing Sen. Joe Manchin (D-W.Va.)
Senators are expected to begin voting on the final version of the bill as soon as Saturday.
While Sinema vowed to work toward "carried interest tax reforms" at a future date, her decision to tank Democrats' latest attempt to limit the egregious loophole for private equity moguls and billionaire hedge fund managers likely means changes won't be coming any time soon, given the close margins in the Senate and GOP opposition.
Democrats are reportedly planning to replace the carried interest provision--which was far weaker than progressives had hoped and would have left much of the loophole intact--with a tax on stock buybacks.
"Kyrsten Sinema has spent her entire Senate term posturing for a multimillion-dollar job in private equity," said Erica Payne, founder and president of the Patriotic Millionaires, a group that supports progressive tax policies. "Now she's looking to close the deal."
"When Sinema loses her primary and her Senate seat (if she even bothers to run at all) her private equity billionaire backers will give her not a golden parachute, but a diamond-studded, ruby-encrusted platinum one," Payne added. "Because of her--and her alone--billionaire fund managers will keep 'getting away with murder,' and Kyrsten Sinema will be their (very well-paid) hitman."
Sinema also won unspecified changes to the structure of the reconciliation bill's proposed 15% corporate minimum tax, which was aimed at preventing large companies from dodging taxes by stashing profits overseas. Republicans falsely portrayed the minimum tax provision as a "dangerous" attack on "American manufacturing," a line that seems to have swayed Sinema.
In the lead-up to her statement Thursday night, Sinema also faced an ad blitz and aggressive lobbying from the Arizona Chamber of Commerce and other business interests opposed to the corporate minimum tax, the biggest proposed revenue raiser in the Inflation Reduction Act.
On Tuesday, Sinema held a private call with Danny Seiden, president of the Arizona Chamber of Commerce. According to Seiden, the Arizona Democrat asked him if the minimum tax was "written in a way that's bad."
"The meeting went great," Seiden told CNN.
Alex Parker, a tax policy expert, tweeted Thursday that "one thing I'm pretty sure about with this refined book minimum tax is that it won't stop the phenomenon of companies with 0% effective tax rates."
According to a new analysis that the watchdog group Accountable.US shared with Common Dreams, prominent members of the Arizona Chamber of Commerce such as Amazon, AT&T, Bank of America, and Microsoft "paid some of the lowest federal effective tax rates on tens of billions in 2021 earnings" and "have spent billions of dollars on acquisitions, stock buybacks, and dividends."
"Across industries, big corporations are making record profits after inflating prices to indefensible degrees on everyday Americans, including many that have paid relatively nothing in federal income taxes," said Liz Zelnick, spokesperson for Accountable.US. "It's no wonder corporate special interests are saying, doing, and spending whatever it takes to avoid paying their fair share."
Senate Majority Leader Chuck Schumer (D-N.Y.) celebrated the new agreement with Sinema Thursday night and said the Inflation Reduction Act is on track to "receive the support of the entire Senate Democratic conference."
"I have had many productive discussions with members of our conference over the past three days and we have addressed a number of important issues they have raised," Schumer said in a statement. "The final version of the reconciliation bill, to be introduced on Saturday, will reflect this work and put us one step closer to enacting this historic legislation into law."
But it appears that the Democratic leadership has only addressed the concerns of right-wing lawmakers who have repeatedly derailed the party's legislative agenda over the past year and a half.
Sen. Bernie Sanders (I-Vt.), the chair of the Senate Budget Committee, has proposed an amendment that would strip all fossil fuel industry handouts from the legislation--an idea certain to face opposition from Manchin and potentially other Democrats.
"We have got to do everything possible to take on the greed of the fossil fuel industry, not give billions of dollars in corporate welfare to an industry that has been actively destroying our planet," Sanders said in a floor speech earlier this week.
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