Last week, Democratic leaders clinched conservative Sen. Kyrsten Sinema’s (D-Arizona) key vote on the Inflation Reduction Act (IRA) by taking out a provision to close a loophole allowing private equity investors and hedge fund managers to pay a lower tax rate on their incomes than the tax rate they would normally face, while providing an exemption from a 15 percent corporate minimum for private equity subsidiaries.
Now, new filings find that private equity executives gave Sinema over half a million dollars before she negotiated to keep the tax loophole, known as the carried interest loophole, intact and give the industry special tax privileges — suggesting for the umpteenth time over the past year that Sinema’s ties to corporate and wealthy interests may be guiding her policy decisions from her powerful seat in the Senate.
The Financial Times found in an analysis published on the same day the Senate passed the IRA that, during this campaign cycle alone, Sinema has gotten over $500,000 in political contributions from executives from private equity corporations like KKR and Carlyle — groups that have a massive influence in a wide range of industries, from health care to housing and more. In total, these donations represent 10 percent of her fundraising from individual donors this election cycle.
Sinema isn’t up for re-election until 2024. But the timing of the donations, which often come in amounts of tens of thousands of dollars from executives from the same company, suggest that Sinema may have been swayed by deep-pocketed interests to kill the tax provision in the IRA.
Private equity donors have for years aggressively lobbied both Democrats and Republicans to keep the carried interest loophole alive, and indeed flew into action when the IRA was released.
They waged a campaign specifically to keep the carried interest loophole from being axed in the IRA, and, just an hour after the first draft of the IRA was released, private equity lobbyists flew into a blitz to get the industry exempted from the bill’s corporate minimum tax. After the bill went through negotiations with Sinema, private equity won both battles.
Sen. Chuck Schumer, who negotiated the IRA with coal baron Sen. Joe Manchin (D-West Virginia) and later Sinema, also benefits from this lobbying, the Financial Times found. In all, the Senate majority leader has received $1.28 million so far this election cycle, which represents about 4.4 percent of the amount he’s received from individual donors.
While it’s unclear if Schumer was swayed by these donations — the provision was in the original bill that he negotiated with Manchin for months — and it’s impossible to know the purpose of these donations, Sinema has shown herself to be deeply in the pockets of industry lobbyists and wealthy interests over the past year.
Sinema herself has even essentially admitted as such. In April, during a meeting held by conservative lobbyist group Arizona Chamber of Commerce, Sinema reassured corporate donors that, as talks for the Build Back Better Act were revived, she would obstruct the bill in the same way that she did all of last year.
Last year, industry donors had targeted Sinema, successfully convincing her to oppose nearly every major provision in the Build Back Better Act. Big Pharma donors showered Sinema and other conservative Democrats with campaign cash as the lawmakers colluded to kill a provision to allow Medicare to access lower drug prices; Sinema was also targeted by Exxon lobbyists as she neutered the portion of the bill that would address the climate crisis.
Meanwhile, the conservative Democrat has been raking in cash from conservative interests. While wooing fundraisers last year, the former progressive activist billed herself as a rank and file Republican, selling herself as anti-government and anti-tax. Conservative billionaires who had never donated to Democrats before were suddenly funneling donations to Sinema and Manchin last year as they worked in tandem to kill the Build Back Better Act.