Sinema was left out of the late-stage negotiations between Manchin and Schumer, though he played a big role in shaping the prescription drug reform bill that will be included in a budget deal package along with tax and climate provisions.
The Arizona senator, who played a central role in writing the bipartisan infrastructure bill that became law last year as well as recently passed gun safety legislation, declined to answer questions as she left the Capitol on Thursday.
Sinema has already expressed support for setting a minimum corporate tax of 15 percent for companies earning more than $1 billion in profits, a centerpiece of the deal that would raise $313 billion.
But the bigger question is whether he will agree to close the carried interest tax loophole that allows asset managers to pay only 20 percent capital gains tax on income earned from managing profitable investments. Its closure will raise about $14 billion over 10 years.
Sinema last year opposed the elimination of the carried interest tax loophole, and critics were quick to point out how much money in campaign contributions it receives from people in the private equity industry.
The alleged interest language was removed from a tax and climate bill passed by the House last year to avoid Sinema’s no vote. The mystery over how Sinema would vote deepened Thursday when he did not attend a special meeting of the Senate Democratic Caucus where Schumer explained the deal.
A Democratic senator who attended the session noted that it is not unusual for Sinema to miss caucus meetings. A spokeswoman for Sinema said it is reviewing the text and will have to see what comes out of the parliamentary process.
Sinema remained silent as reporters peppered her with questions as she walked to her car on the east front of the Capitol. The last shouted question she heard before closing her car door was, “Are you going to foot the bill?”
Sinema has already left its mark on the bill by saying early in last year’s negotiations that it would not support raising marginal tax rates for individuals or raising the corporate tax rate above the current level of 21 percent.
In an effort to appease Cinema, the White House instead proposed an adjusted gross income tax of 5 percent on income over $10 million, affecting only the wealthiest 0.02 percent of Americans.
Sinema last year praised the 15% minimum corporate tax as “a common-sense step” to ensure that highly profitable companies “pay a reasonable minimum corporate tax on their profits, just like everyday small businesses from Arizona and Arizona do.”
Schumer appears certain to have Sinema’s vote on the tax and climate bill, which would raise about $124 billion in new revenue from strengthening tax compliance enforcement and IRS taxpayer services and operations.
“This Senate Democratic majority will make sure we close tax loopholes and make the wealthiest corporations and individuals pay their fair share,” he announced on the Senate floor Thursday afternoon. “Many in Washington have pledged to address these challenges, but where past efforts have failed, Senate Democrats and this majority will move quickly to deliver for the American people.”
When asked about Sinema, Schumer told reporters only that she was considering the bill.
Closing the carried interest loophole has been a priority for some Democrats for more than a decade, but the issue has divided the party.
In 2010, then-Senate Finance Committee Chairman Max Baucus (D-Mont.) and then-Ways and Means Committee Chairman Sander Levin (D-Mich.) tried to close the carried interest loophole to pay for a benefits package unemployment and tax expansion, but faced opposition from then-Sen. John Kerry (D-Mass.) and Sen. Maria Cantwell (D-Wash.).
Since then, sentiment in the Democratic caucus has shifted overwhelmingly in favor of closing the loophole.
“Frankly, many on Wall Street have come to the view that if there was any justification” for taxing asset managers’ income at the capital gains rate, “it’s long gone,” said Sen. Richard Blumenthal (D-Conn. ), whose state is home to many asset managers and investment gurus.
Private equity groups and hedge funds are already mobilizing to remove the provision from the budget package, warning on Thursday that it would hurt small businesses as well as endowments and pension funds, according to a Reuters report.
Manchin, however, says he is “adamant” about keeping the carried interest provision in the bill.
“I’m not ready to lose it,” he said. “What we have is a good bill that is fair to everyone. It’s a give-and-take proposition. McCarthy slams Pelosi over lawmaker’s stock trading ban Minnesota Democrat says not endorsing Biden in 2024 “I think the people who benefited from the interest for years and years and years knew they had a good run, it was too late to get rid of it and you can’t justify it anymore.” Senate Democrats, meanwhile, surprised last year by Sinema’s unexpected opposition to raising the marginal income tax and corporate tax rates, are careful not to venture predictions about where the issue will go.
“I don’t speak for Sen. Sinema, but she’s obviously looking at the bill and will have something to say about it soon,” said Sen. Chris Murphy (D-Conn.). “I’m always optimistic.”