Senator Kyrsten Sinema, Arizona, raided large sums of campaign money from the private equity sector, which won a victory after lobbying to remove a billion-dollar tax loophole from the Inflation Reduction Act as part of its deal to support the legislation. .
The Arizona Democrat announced Thursday that it would “go ahead” in supporting the Inflation Reduction Act, the reconciliation package presented by the Democrats in the Senate last week. As part of the deal, it successfully removed the provision on the reported interest tax, which aimed at a loophole used by wealthy Americans.
“We have decided to remove the transported interest tax provision, protect advanced manufacturing and strengthen our clean energy economy in the Senate budget reconciliation legislation,” Sinema said on Thursday. “Subject to review by the parliamentarian, I will go on.”
Sinema’s move is a victory for the private equity sector, which pours large sums of money into its campaign coffers.
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Individuals and political action committees from the private equity and investment sector have provided her campaign with $ 282,650 in donations this election cycle, making her the industry’s sixth largest Senate beneficiary, according to data collected by the Center for Responsive Politics.
Meanwhile, Senate Majority Leader Chuck Schumer, who spearheaded the bill, is by far the industry darling. The New York Democrat campaign raised nearly $ 1.2 million from individuals and industry PACs in this cycle. Its campaign even surpasses contributions from those who work for hedge funds by more than $ 400,000, data from the Center for Responsive Politics shows.
“I strongly believe in the carried interest loophole. I voted for it. At first I pushed for it to be on this bill,” Schumer told reporters on Friday. “Senator Sinema said she wouldn’t vote for the bill, she wouldn’t even move to proceed unless we eliminated it. So we had no choice.”
Sinema’s campaign did not immediately respond to a Fox News Digital investigation into its private equity donations.
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The reported interest provision included in the original reconciliation package would have eliminated a loophole that allows private equity and hedge fund managers to pay less tax. Wealthy fund managers are able to report income as capital gains, not regular income, by lowering their tax rate from 37.9% to 23.8% and potentially saving them hundreds of thousands of dollars, under the little-known tax break. .
The loophole would have raised $ 14 billion in federal tax revenue, according to initial estimates. As part of negotiations with Sinema, the Democrats will attack a 1% tax on stock repurchases to help pay for the $ 433 billion legislation.
On Friday, the Chamber of Commerce, the nation’s largest business lobbying group, applauded Sinema’s effort to remove the carried-interest loophole provision.
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“Taxing capital expenditures – investments in new buildings, factories, equipment, etc. – is one of the most economically destructive ways to raise taxes,” said Neil Bradley, chamber executive vice president and policy officer. “It punishes innovation, it leaves a country that is poorer and less able to grow”.
“While we look forward to reviewing the new bill, Senator Sinema deserves credit for recognizing it and fighting for change,” he added.
Private equity and corporate groups had argued that the provision would hurt smaller US businesses the most.
“More than 74% of private equity investments went to small businesses last year,” said Drew Maloney, president of the American Investment Council’s private equity interest group, in a statement following the presentation of the bill. . “As small business owners face rising costs and our economy faces severe headwinds, Washington shouldn’t go ahead with a new private capital tax that’s helping local employers survive and grow.”
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Karen Kerrigan, chairman of the Small Business and Entrepreneurship Council, said the provision will eventually be absorbed by “ordinary Americans and our nation’s small businesses.”
“The increase in taxes on carried interest means that many entrepreneurial and small businesses across all industries will not have access to the capital they need to compete, scale, innovate and tackle tough economic conditions,” Kerrigan told FOX Business. last week. “This will only harm local economies and local workers and undermine US competitiveness more generally.”