The Washington Post

Don’t sink this bill

Democrats have provided a bill in line with Ms. Sinema’s priorities.

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SENATE DEMOCRATS have overcome obstacle after obstacle in their push to pass a reconcilia­tion package, and this week they’re close to the finish. Unless a final something — or someone — stands in their way.

Sen. Kyrsten Sinema (D-ariz.) reportedly wasn’t included in talks between Sen. Joe Manchin III (D-W.VA.) and Senate Majority Leader Charles E. Schumer (D-N.Y.) as they hammered out the details of the surprise Inflation Reduction Act announced last week. The deal, nonetheles­s, is largely in line with the preference­s she laid out in past negotiatio­ns: from its relatively modest reforms to prescripti­on drug pricing to action on climate to the 15 percent corporate minimum tax rate estimated to raise $313 billion. Indeed, that the legislatio­n neglects broader hikes on the highestinc­ome Americans is itself a form of concession. There is, however, a big exception. The closure of the carried interest loophole has been a boogeyman for Ms. Sinema from the beginning. But it is in the bill before her today — and for good reason.

The carried interest loophole is essentiall­y a way for fund managers to make a lot of money and pay the government very little back because the share of the fund’s profits they receive for their work is taxed at a top rate of just under 24 percent — dramatical­ly less than the 37 percent top rate for ordinary income. This giveaway is so valuable that many have it to thank for the bulk of their fortunes. The Wall Street Journal reported last week that Blackstone Inc. Chief Executive Stephen Schwarzman received somewhere around $150 million in carried interest compensati­on last year; two other executives at the company received close to $92 million and $77 million. There’s simply no excuse for any lawmaker who purports to care about economic justice or equality to oppose eliminatin­g the carried interest loophole.

Yet all the same, Congress — many of whose members benefit from the donations of the deep-pocketed — could allow this scandal to persist, especially if Ms. Sinema demands it. She shouldn’t. Republican­s have been making hay in recent days of an analysis by the nonpartisa­n Joint Committee on Taxation, claiming that the reconcilia­tion would raise rates on those earning less than $400,000 per year, contrary to President Biden’s pledges. This is mostly meaningles­s. The theory that some of the new 15 percent minimum tax on corporatio­ns would be passed on to employees and to shareholde­rs doesn’t change the reality that the bulk of the burden would fall on the richest and the bulk of the benefit would redound to those worse off: whether it comes as help affording medicine or health care or as an investment in slowing global warming.

Ms. Sinema shouldn’t sink this bill, most of whose contents she has indicated in the past that she supports. And she shouldn’t sink it because she opposes closing the carried interest loophole. That provision unambiguou­sly aids those who need help most, at the expense only of those who need it not at all.

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