Sen. Kyrsten Sinema, the Arizona Democrat who single-handedly thwarted her party’s longtime goal of raising taxes on wealthy investors, received nearly $1 million over the past year from private equity professionals, hedge fund managers and venture capitalists whose taxes would have increased under the plan.
For years, Democrats have promised to raise taxes on such investors, who pay a significantly lower rate on their earnings than ordinary workers. But just as they closed in on that goal last week, Sinema forced a series of changes to her party’s $740 billion election-year spending package, eliminating a proposed “carried interest” tax increase on private equity earnings while securing a $35 billion exemption that will spare much of the industry from a separate tax increase other huge corporations now have to pay.
With Sinema’s alterations intact, the bill was given final approval by Congress on Friday and is expected to be signed by President Joe Biden next week.
Since she was elected to the House a decade ago, Sinema has long aligned herself with the interests of private equity, hedge funds and venture capital, helping her net at least $1.5 million in campaign contributions. But the $983,000 she has collected since last summer more than doubled what the industry donated to her during all of her preceding years in Congress combined, according to an Associated Press review of campaign finances disclosures.
The donations, which make Sinema one of the industry’s top beneficiaries in Congress, serve as a reminder that high-power lobbying campaigns can dramatically affect how legislation is crafted. They also highlight a degree of political risk for Sinema, whose unapologetic defence of the industry’s favourable tax treatment is viewed by many in her party as indefensible.
“From their vantage point, it’s a million dollars very well spent,” said Dean Baker, a senior economist at the Center for Economic and Policy Research, a liberal-leaning think tank. “It’s pretty rare you see this direct of a return on your investment. So I guess I would congratulate them.”
Sinema’s office declined to make her available for an interview. Hannah Hurley, a Sinema spokesperson, acknowledged the senator shares some of the industry’s views on taxation but rebuffed any suggestion that the donations influenced her thinking.
“Senator Sinema makes every decision based on one criterion: 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.”
The American Investment Council, a trade group that lobbies on behalf of private equity, also defended their push to defeat the tax provisions.
“Our team worked to ensure that members of Congress from both sides of the aisle understand how private equity directly employs workers and supports small businesses throughout their communities,” Drew Maloney, the organization’s CEO and president, said in a statement.
Centerbridge Partners was also part of a consortium of hedge funds that helped usher in an era of austerity in Puerto Rico after buying up billions of dollars of the island government’s $72 billion debt and filing legal proceedings to collect. A subsidiary of Centerbridge Partners was among a group of creditors who repeatedly sued one of the U.S. territory’s pension funds. In one 2016 lawsuit, a group of creditors asked a judge to divert money from a Puerto Rican pension fund to collect.
A Centerbridge representative could not immediately provide a comment Friday.
Liberal activists in Arizona say they plan to make Sinema’s reliance on donations from wealthy investors a campaign issue when she is up for reelection in 2024.