Sen. Kyrsten Sinema Raises Concern on Proposed Tax Bill as Democrats Race To Get a Vote for Manchin-Backed Spending Agenda

Republican senators and the business community are putting pressure on Sen. Kyrsten Sinema to kill - or significantly alter - the Democrats' economic plan, claiming in private meetings that the proposed tax rises will harm businesses in her home state of Arizona.

In addition, on Tuesday, during a private call with business groups, Sinema's inquiry regarding the bill's proposed 15% minimum tax on companies gave them a reason to be optimistic.

Sinema Urges Changes to Inflation Reduction Act

The office of Sinema declined to comment on the phone contact. However, she has raised reservations about some tax elements, namely the Democrats' proposal to boost taxes on so-called carried interest, which would affect private equity and hedge fund managers and raise $14 billion. According to a person familiar with the situation, Sinema has told top Democrats that she wants that clause removed from the measure.

Sinema, the lone holdout among the 50-member Senate Democratic Caucus who was caught off guard by the arrangement last week, has yet to say anything about the plan, giving conservative detractors cause to hope they can persuade her to alter her mind. Democrats remain hopeful that they can persuade her, but they concede that certain tweaks, particularly about tax policies, may be required to sway her vote.

However, although she has been meeting with Democrats who have lauded the bill's advantages, Republicans such as Senate Minority Whip John Thune have raised reservations to her about the corporate taxes and the idea to recruit additional IRS agents to strengthen tax enforcement, according to CNN.

Sinema has long expressed worries about the tax provision, which is a priority for Biden and, according to Manchin, is critical to his backing for a settlement after months of discussions. Sinema is also requesting $5 billion in drought resilience grants for her parched state. Although her office would not respond, the newspaper cited persons familiar with her worries.

Democrats Are Working To Get Sen. Kyrsten Sinema's Vote

The senator has spent days dodging reporters' inquiries about whether she would support the Manchin-Schumer plan, even though the White House and even progressive Democrats have endorsed it. The legislation is a significant reduction from Biden's initial Build Back Better program.

If drought assistance for her state has overtones of the infamous "cornhusker payback," Manchin may have opened the door by obtaining permitting commitments for the Mountain Valley Pipeline, which would transmit liquid natural gas through nearly 300 miles of northwest West Virginia and southern Virginia.

According to his office, Manchin received pledges from the White House and House Speaker Nancy Pelosi to allow it to be finished. Manchin has consistently advocated for more energy to be put on the market to address inflation, even as he touts other climate-friendly proposals in the overall package, such as funding for electric vehicles and renewable energy, according to Daily Mail.

Republicans are attempting to persuade her to weaken or eliminate a 15% tax on corporations that report more than $1 billion in profit to shareholders, as well as a carried interest tax on profits earned by a hedge fund, venture capital, or private equity executives - a tax that Sinema has previously opposed.

According to Manchin and Schumer, the levies would raise around $327 billion for environmental and energy programs.

The Senate Republican response has been to point to a Joint Committee on Taxation study from last week, which stated that the Inflation Reduction Act would boost taxes on Americans earning less than $400,000 per year. Manchin, who has termed accusations that the deal will result in middle-class tax increases an outright falsehood, said he and Sinema have been exchanging messages back and forth, New York Post reported.