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Sinema Took Money While Killing Tax    08/13 09:19

   

   WASHINGTON (AP) -- 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.

   The bill, with Sinema's alterations intact, was given final approval by 
Congress on Friday and is expected to be signed by President Joe Biden next 
week.

   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 since she was elected to the House a decade ago. 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 a reminder of the way that high-power lobbying campaigns can 
have dramatic implications for the way legislation is crafted. They also 
highlight a degree of political risk for Sinema, whose unapologetic defense of 
the industry's favorable 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 criteria: 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.

   Sinema's defense of the tax provisions offer a jarring contrast to her 
background as a Green Party activist and self-styled "Prada socialist" who once 
likened accepting campaign cash to "bribery" and later called for "big 
corporations & the rich to pay their fair share" shortly before launching her 
first campaign for Congress in 2012.

   She's been far more magnanimous since, praising private equity in 2016 from 
the House floor for providing "billions of dollars each year to Main Street 
businesses" and later interning at a private equity mogul's boutique winery in 
northern California during the 2020 congressional recess.

   The soaring contributions from the industry to Sinema trace back to last 
summer. That's when she first made clear that she wouldn't support a carried 
interest tax increase, as well as other corporate and business tax hikes, 
included in an earlier iteration of Biden's agenda.

   During a two-week period in September alone, Sinema collected $47,100 in 
contributions from 16 high-ranking officials from the private equity firm 
Welsh, Carson, Anderson & Stowe, records show. Employees and executives of KKR, 
another private equity behemoth, contributed $44,100 to Sinema during a 
two-month span in late 2021.

   In some cases, the families of private equity managers joined in. David 
Belluck, a partner at the firm Riverside Partners, gave a $5,800 max-out 
contribution to Sinema one day in late June. So did three of his college-age 
kids, with the family collectively donating $23,200, records show.

   "I generally support centrist Democrats and her seat is important to keep a 
Democratic Senate majority," Belluck said, adding that his family has known 
Sinema since her election to Congress. "She and I have never discussed private 
equity taxation."

   The donations from the industry coincide with a $26 million lobbying effort 
spearheaded by the investment firm Blackstone that culminated on the Senate 
floor last weekend.

   By the time the bill was up for debate during a marathon series of votes, 
Sinema had already forced Democrats to abandon their carried interest tax 
increase.

   "Senator Sinema said she would not vote for the bill .. unless we took it 
out," Senate Majority Leader Chuck Schumer told reporters last week. "We had no 
choice."

   But after private equity lobbyists discovered a provision in the bill that 
would have subjected many of them to a separate 15% corporate minimum tax, they 
urgently pressed Sinema and other centrist Democrats for changes, according to 
emails as well as four people with direct knowledge of the matter who requested 
anonymity to discuss internal deliberations.

   "Given the breaking nature of this development we need as many offices as 
possible weighing in with concerns to Leader Schumer's office," Blackstone 
lobbyist Ryan McConaghy wrote in a Saturday afternoon email obtained by the AP, 
which included proposed language for modifying the bill. "Would you and your 
boss be willing to raise the alarm on this and express concerns with Schumer 
and team?"

   McConaghy did not respond to a request for comment.

   Sinema worked with Republicans on an amendment that stripped the corporate 
tax increase provisions from the bill, which a handful of vulnerable Democrats 
also voted for.

   "Since she has been in Congress, Kyrsten has consistently supported 
pro-growth policies that encourage job creation across Arizona. Her tax policy 
positions and focus on growing Arizona's economy and competitiveness are 
longstanding and well known," Hurley, the Sinema spokesperson, said.

   But many in her party disagree. They say the favorable treatment does little 
to boost the overall economy and argue there's little compelling evidence to 
suggest the tax benefits are enjoyed beyond some of the wealthiest investors.

   Some of Sinema's donors make their case.

   Blackstone, a significant source of campaign contributions, owns large 
tracts of real estate in Sinema's home state, Arizona. The firm was condemned 
by United Nations experts in 2019 who said Blackstone's financial model was 
responsible for a "financialization of housing" that has driven up rents and 
home costs, "pushing low-income, and increasingly middle-income people from 
their homes."

   Blackstone employees executives and their family members have given Sinema 
$44,000 since 2018, records show.

   In a statement, Blackstone called the allegations by the UN experts "false 
and misleading" and said all employee contributions are "strictly personal." 
The firm added that it was "incredibly proud of its investments in housing."

   Another major financial services donor is Centerbridge Partners, a New 
York-based firm that buys up the debt of distressed governments and companies 
and often uses hardball tactics to extract value. Since 2017, Sinema has 
collected at least $29,000 from donors associated with the firm, including 
co-founder Mark Gallogly and his wife, Elizabeth Strickler, records show.

   In 2012, Centerbridge Partners purchased Arizona-based restaurant chain P.F. 
Chang's for roughly $1 billion. After loading the struggling company up with 
$675 million of debt, they sold it to another private equity group in 2019, 
according to Bloomberg News. The company received a $10 million coronavirus aid 
loan to cover payroll, but shed jobs and closed locations as it struggled with 
the pandemic.

   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, the group of creditors asked a judge to divert money from a 
Puerto Rican pension fund in order to collect.

   A Centerbridge representative could not immediately provide 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.

   "There are many takes on how to win, but there is no universe in which it is 
politically smart to fight for favorable tax treatment of the wealthiest people 
in the country," said Emily Kirkland, a political consultant who works for 
progressive candidates. "It's absolutely going to be a potent issue."

 
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