Legislation

Democrats gut provisions in “climate” bill to raise taxes on hedge funds, corporations

In a shameless display of subservience to the corporate-financial oligarchy, the Biden White House and Democratic leadership in the Senate agreed on Thursday to gut provisions in their climate and tax bill that would modestly raise taxes on multibillion-dollar corporations and hedge fund billionaires.

Sen. Kyrsten Sinema, D-Ariz., speaks during the Senate Finance Committee, Tuesday, Oct. 19, 2021. (Mandel Ngan/Pool via AP)

Senate Majority Leader Chuck Schumer (D-NY), otherwise known as the “senator from Wall Street,” announced a deal with Arizona Democrat Kyrsten Sinema to drop a provision ending the infamous “carried interest” loophole, which allows hedge fund and private equity managers to pay federal taxes on their income at the capital gains rate, which is almost 50 percent lower than the normal rate for very high earners.

The provision would have affected only a relative handful of billionaires, raising an estimated $14 billion in tax revenues over 10 years.

The Democratic leadership further agreed to slash the scope of its proposed 15 percent minimum tax on corporations worth more than a billion dollars so as to virtually exclude large manufacturing companies. This was despite the fact that only hours before Schumer and Kyrsten announced their deal, the Senate Finance Committee released data from the Joint Committee on Taxation showing that up to 125 billion-dollar companies averaged a mere 1.1 percent effective tax rate in 2019.

Sinema had been the last Democratic holdout on the so-called Inflation Reduction Act, announced last week after Schumer and West Virginia Senator Joe Manchin agreed to a drastically reduced version of President Joe Biden’s “Build Back Better” package of climate, tax and social measures.

Biden and the Democrats are seeking to get the bill approved by the evenly divided Senate through the budget reconciliation process, which requires a mere majority vote and blocks a filibuster by the Republicans, who will vote unanimously against the bill. That means every Senate Democrat must vote for the measure, in which case Vice President Kamala Harris, as president of the Senate, will cast the tie-breaking vote.

The Biden administration—increasingly discredited as a result of its COVID-19 mass infection policies, its proxy war against Russia in Ukraine, its refusal to hold to account Trump and his fellow coup plotters and its efforts to impoverish workers through record inflation—is facing collapsing poll numbers and the prospect of a Republican takeover of one or both houses of Congress in the November midterm elections.

It is desperate to register a legislative “win,” and is cynically presenting its deal with Manchin as a breakthrough for the environment, for reduced prescription drug prices and for tax fairness. It is none of these things.


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