- Kyrsten Sinema said she’d support the Inflation Reduction Act after striking deal with fellow Dems.
- It involved keeping a loophole used by private equity execs to pay less tax on their compensation.
- Open Secrets lists three major private equity firms as leading sources of donations to Sinema’s campaign.
Kyrsten Sinema’s decision to back the proposed Inflation Reduction Act has put President Joe Biden’s derailed drug pricing, energy, climate change, and tax legislation back on track.
The Arizona senator’s support was won late Thursday after fellow Democrats dropped a proposal to close the so-called “carried interest” loophole, which is commonly used by private equity, hedge fund, and property investment executives to pay a lower rate of tax on their compensation.
As such, it was a win for many Sinema campaign donors.
According to Open Secrets, the global private equity firms KKR, Carlyle, and Apollo Global Management are among the leading 20 sources of donations to Sinema’s campaign committee between 2017 and 2022.
As Open Secrets notes, it isn’t the organizations in the list that donated money directly, but rather, their “political action committees, their individual members or employees or owners, and those individuals’ immediate families.” Further, subsidiaries and affiliates are included in the organizations’ total donations figure.
Other organizations listed by Open Secrets among the leading 20 sources of donations include Andreessen Horowitz, the Silicon Valley venture capital firm that has invested in companies including Facebook, Twitter, and Airbnb; and Rudin Management, a private commercial and residential landlord and developer in New York City.
All in all, Sinema has received $2.2 million from investment firms between 2017 and 2022, according to Open Secrets.
Sinema’s office didn’t immediately respond to Insider’s request for comment.
On Wednesday, Sinema told donors at a campaign fundraiser that it made no sense to squeeze private equity firms by raising taxes on carried interest, because the industry will finance projects under new infrastructure and semiconductor legislation, a lobbyist who attended the event told The Wall Street Journal.
In simple terms, when private equity, hedge fund, or real estate investment executives take a percentage of profits from an investment gain as compensation, they’re taxed at the capital-gains rate, which is lower than the comparable income-tax rate.
Dropping carried interest from the package of legislation marks a U-turn for the Democrats after Sen. Joe Manchin announced a deal on the matter with Senate Majority Leader Chuck Schumer last week.
The carried interest tax provision of the Inflation Reduction Act was expected to have raised about $14 billion over 10 years.
Biden on Thursday evening praised Sinema’s cooperation as “another critical step toward reducing inflation and the cost of living for America’s families.”
Democrats are seeking to pass the law using the Senate’s “reconciliation” process to stave off a Republican filibuster.