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Wednesday, March 29, 2023

Cinema took Wall Street money while taxing investors

WASHINGTON ( Associated Press) — Sen. Kirsten Cinema, an Arizona Democrat who single-handedly thwarted her party’s long-time goal of raising taxes on wealthy investors, has received nearly $US$ billion over the past year from private equity professionals, hedge fund managers and venture capitalists. 1 million received, whose tax will increase under the scheme.

For years, Democrats have promised to raise taxes on investors who pay a significantly lower rate on their earnings than ordinary workers. But as he hit that goal last week, Cinema forced several changes to his party’s $740 billion election-year spending package, eliminating the proposed “interest” tax hike. Other giant corporations now have to pay, while securing a $35 billion exemption on private equity earnings that would protect the industry from a separate tax hike.

Bill with changes to cinema, given final approval by Congress on Friday and is expected to be signed by President Joe Biden next week.

Sinima has long associated herself with private equity, hedge funds and venture capital interests, helping her with at least $1.5 million in campaign contributions since she was elected to the House a decade ago. But according to an Associated Press review of campaign finance disclosures, the $983,000 she’s collected since last summer is more than double what the industry has donated to her during all her preceding years in Congress.

The donations, which make Cinema one of the industry’s top beneficiaries in Congress, are a reminder that high-power lobbying campaigns can have dramatic implications for the way legislation is drafted. He also exposes a somewhat political risk to cinema, whose unapologetic defense of the industry’s favorable tax treatment is seen by many in his party as unforgivable.

“From his vantage point, this is a million dollars very well spent,” said Dean Baker, a senior economist at the Center for Economic and Policy Research, a liberal-minded think tank. “It’s very rare that you see this visible return on your investment. So I guess I would congratulate them.”

The Office of Cinema refused to make him available for interview. Cinema spokeswoman Hannah Hurley acknowledged that the senator shared some of the industry’s views on taxation, but dismissed any suggestion that the charity influenced her thinking.

“Senator Cinema makes every decision based on one criterion: what’s best for Arizona,” Hurley said in a statement. “She has been clear and consistent for more than 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 its push to defeat the tax provisions.

Drew Maloney, the organization’s CEO and president, said in a statement, “Our team worked to ensure that members of Congress from both sides of the aisle understand how private equity directly employs workers and small businesses in their communities.” supports.”

Sinima’s defense of tax provisions stands in contrast to her background as a Green Party activist and self-styled “Prada Socialist”, who once compared accepting campaign cash to a “bribe”. and later asked “big corporations and the wealthy to pay their fair share” shortly before launching his first campaign for Congress in 2012.

Praising private equity from the House floor for providing “billions of dollars each year to Main Street businesses” in 2016 and later interning at a private equity mogul’s boutique winery in Northern California during the 2020 congressional recess She has been more generous than that.

The growing contribution from the industry to cinema dates back to last summer. That’s when she made it clear for the first time that she would not support the interest tax hike, as well as other corporate and business tax increases, that were included in the first iteration of Biden’s agenda.

During a two-week period in September alone, the cinema collected $47,100 in contributions from 16 high-ranking executives at the private equity firm Welsh, Carson, Anderson & Stowe, records show. Employees and executives of KKR, another private equity giant, contributed $44,100 to the cinema over a two-month period at the end of 2021.

In some cases, families of private equity managers became involved. David Belluk, a partner at the Riverside Partners firm, contributed a maximum of $5,800 to Sinima on one day at the end of June. His three college-age children, along with the family collectively donated $23,200, records show.

“I generally support centrist Democrats, and their seat is critical to maintaining a Democratic Senate majority,” Belluk said. He said that his family has known Sinima since her election to the Congress. “He and I have never discussed private equity taxation.”

Donations from the industry coincide with a $26 million lobbying effort led by investment firm Blackstone that ended on the Senate floor last weekend.

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

Senate Majority Leader Chuck Schumer told reporters last week, “Senator Cinema said she won’t vote for the bill .. until we get it out.” “We didn’t have a choice.”

But after private equity lobbyists discovered a provision in the bill subjecting many of them to a separate 15% corporate minimum tax, they pressured Instant Cinema and other centrist Democrats for the change, emailed four people as well. with direct knowledge of. The case which requested anonymity to discuss internal deliberations.

“Given the breaking nature of this development we need to have as many offices as possible with the concerns of Leader Schumer’s office,” Blackstone lobbyist Ryan McConaughey wrote in an email obtained by the Associated Press Saturday afternoon, including the proposed language to amend the bill. “Would you and your boss be prepared to sound the alarm and voice concerns with Schumer and the team?”

McConaughey did not respond to a request for comment.

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

“Since she’s been in Congress, Kirsten has consistently supported pro-growth policies that encourage job creation in Arizona. Her tax policy position and focus on Arizona’s growing economy and competitiveness are long and well-known. It is,” said Hurley, a spokesperson for Cinema.

But many in his party disagree with this. They say that favorable behavior does little to boost the overall economy and argue that there is little compelling evidence to suggest tax benefits beyond some of the wealthiest investors.

Some donors of cinema give their side.

Blackstone, a significant source of campaign contributions, owns large portions of real estate in the cinema’s home state, Arizona. In 2019 the firm was condemned by UN experts, who said Blackstone’s financial model was responsible for “financializing housing”, which has pushed up rents and house costs, “for low-income, and increasingly middle-aged people”. People with income have been pushed out of their homes.”

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

Blackstone called the allegations from UN experts “false and misleading” in a statement and said all employee contributions are “entirely personal”. The firm said it is “incredibly proud of its investment in housing.”

Another major financial services donor is Centerbridge Partners, a New York-based firm that buys out debt from 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 Gallogli and his wife Elizabeth Strickler, records show.

In 2012, Centerbridge Partners purchased Arizona-based restaurant chain PF Chang for approximately $1 billion. He sold it to another private equity group in 2019, after loading the struggling company with $675 million in debt, according to Bloomberg News. The company received a $10 million coronavirus aid loan to cover payroll, but has closed jobs and closed positions as it battles 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 filing legal proceedings to buy and collect billions of dollars of the island government’s $72 billion in debt. A subsidiary of Centerbridge Partners was among a group of creditors who repeatedly sued one of the pension funds in the US territory. In a 2016 lawsuit, a group of creditors asked a judge to collect money from the Puerto Rican Pension Fund.

A Centerbridge representative could not immediately provide comment on Friday.

Liberal activists in Arizona say they plan to make Sinema’s reliance on donations from wealthy investors a campaign issue when they are up for re-election in 2024.

Emily Kirkland, a political consultant who works for Progressive Candidates, said, “There’s a lot about how to win, but there’s no universe in which to fight for tax treatment favorable to the nation’s wealthiest people politically. Be smart.” “It’s absolutely going to be a powerful issue.”


Associated Press writer Josh Bok contributed to this report.

World Nation News Desk
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