Ever since Senators Schumer and Manchin announced their $700B deal for the Senate to pass a modified Build Back Better bill under the budget reconciliation process there have been two question marks: would Arizona Senator Sinema support the bill and what sections would win the approval of the Senate Parliamentarian?

The first question was answered last night when Senator Sinema announced support of the package with some relatively minor changes.

The first of the Sinema changes had been widely speculated as her “ask” was the removal of a provision that would have modified the carried interest rule that reduces taxes for private equity and hedge fund managers.  The provision currently allows for much of their income to be taxed at the capital gains rate of 21% rather than the highest ordinary rate of 36%.  It isn’t clear why the Senator went to bat for the industry which is largely based in NYC, but it won’t hurt her fundraising when she is up in 2024.

Democrats have been trying to close the carried interest loophole for years, and this seemed like the vehicle that would get it done, but the Arizona Senator gave the industry one more reprieve. However, to help recoup the lost revenue the bill will add a new tax of 1% on stock buybacks; indeed the stock b...

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