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tammy baldwin
Meet the 11 Private Equity Donors Trying to Buy the 2024 Election
The financiers are spending big on candidates that will preserve the carried interest tax deduction, which allows them to pay a lower 23.8% tax rate on the capital gains passed on to them as compensation rather than the top income tax rate of up to 40.8%.
Aug 05, 2024
Eleven of the top 50 individual contributors to political campaigns this election cycle work in the finance industry—specifically in private equity—and are betting big on congressional and presidential candidates who will protect one very special federal tax break worth billions of dollars to them: the carried interest loophole.
So far this election cycle, these 11 private equity billionaires have already contributed more than double the amount that more than 147 private equity firms pumped into federal elections in all of the 2016 election cycle. Private equity—which largely entails rich investors buying and selling companies—is only a part of a larger finance industry that includes hedge funds, securities firms, banks, and investment companies and managers.
This loophole, of course, is not the only tax perk that private equity firms favor. They also push to keep the tax rate on capital gains much lower than the tax rate on ordinary income.
Finance—securities and investments—tops the list of industries giving the most money to date this round, with more than $1 billion in contributions to candidates, parties, and PACs, according to the nonpartisan political funding tracker Open Secrets.
The 11 private equity leaders have contributed more than $223 million to congressional and presidential candidates and the super PACs that support them, accounting for almost 20% of all money contributed by thousands of companies in the finance sector, according to Open Secrets data. During the 2016 election cycle, the Center for Media and Democracy (CMD) reported that the 147 private equity firms it analyzed contributed $92 million to candidates and super PACs.
The carried interest tax deduction allows private equity investment managers to pay a lower 23.8% tax rate on the capital gains passed on to them as compensation rather than the top income tax rate of up to 40.8% they would pay on the same amount if it were considered wage or salary income.
“Carried interest is a form of compensation paid to investment executives like private equity, hedge fund and venture capital managers,” CNBCexplains. “The managers receive a share of the fund’s profits—typically 20% of the total—which is divided among them proportionally. The profit is called carried interest, and is also known as ‘carry’ or ‘profits interest.’”
The $223-million investment these 11 private equity billionaires are making in campaign contributions in hopes of keeping the loophole intact will save the industry an estimated $14 billion in taxes over 10 years, as Senate Democrats pointed out in 2022 when they were forced to let go of legislation to get rid of it.
This loophole, of course, is not the only tax perk that private equity firms favor. They also push to keep the tax rate on capital gains much lower than the tax rate on ordinary income. And some private equity managers have other public policy interests, like billionaire Jeffery Yass, the largest individual donor this election cycle, who gives millions of dollars to school choice groups and other conservative causes.
On April 15, 2024, Sen. Tammy Baldwin (D-Wis.) introduced the Carried Interest Fairness Act (S. 4123), which she co-sponsored with 14 other senators, in order to eliminate the tax loophole, something that Democrats have long sought to fix. The proposed legislation treats the buying and selling of companies as ordinary income if that is a firm’s primary business. “By closing the carried interest loophole, we’ll make our tax code fairer for working families, cut the deficit, and ensure that those at the top of the food chain aren’t exploiting the system to further enrich themselves,” Baldwin said in a press release.
While 90% of the private equity contributions made so far this election cycle have gone to Republicans or the PACs that support them, not every Democrat is opposed to eliminating the loophole.
Before Sen. Kyrsten Sinema (I-Ariz.) left the party to become an independent in 2022, she “courted private equity titans and received the maximum allowed amount from the PACs of leading private equity firms such as The Carlyle Group, along with the industry’s trade organization, the American Investment Council (AIC),” CMD reported.
Private equity billionaires have dramatically increased their spending since Sinema decided not to run for reelection this year.
In 2017, as part of then-President Donald Trump’s Tax Cuts and Jobs Act, the length of time needed to trigger the long-term capital gains tax was raised from one year to three just for private equity. The loophole itself was kept in the bill because of fierce industry lobbying, even though Trump groused that those who took the tax break were “getting away with murder.”
Former President Barack Obama and President Joe Biden both pledged to get rid of the unfair tax loophole. Obama never followed through, and Biden dropped the loophole fix from the Inflation Reduction Act due to opposition from Sinema. Anti-tax zealot Grover Norquist compares the situation to a dog chasing a bus. “You didn’t mean to catch the bus, you meant to whine about the bus,” he famously said.
Vice President Kamala Harris, the presumptive Democratic nominee for president, has made few comments so far on private equity and has not yet expressed her views about the carried interest loophole.
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After Investigation by Sanders-Led Panel, Pharma Giant Caps Inhaler Costs
"We launched an investigation into big drug companies because the prices they were charging for inhalers just didn't add up," said Sen. Tammy Baldwin. "And looks like we were right."
Mar 07, 2024
Starting in June, the German pharmaceutical giant Boehringer Ingelheim will cap co-pays for its inhalers at $35 for U.S. patients—a decision that came just two months after members of a Senate panel led by Sen. Bernie Sanders launched an investigation into inhaler price gouging.
Combivent Respimat, one of Boehringer Ingelheim's inhaler products, carries a list price of around $500 in the U.S. That's roughly 70 times what the company charges for the same product in France, where patients can get the inhaler for $7.
Boehringer Ingelheim said Thursday that it plans to reduce the list prices of some of its inhalers.
Sanders (I-Vt.), chair of the Senate Health, Education, Labor, and Pensions (HELP) Committee, called the company's moves "very positive steps in the right direction" and demanded that other major inhaler manufacturers "take similar action."
"A Vermont resident recently told my office that she has to pay $320 per month for Boehringer Ingelheim's Spiriva HandiHaler. As a result of today's decision, she could save more than $3,000 a year on the inhaler that she needs to breathe," Sanders said in a statement Thursday. "If Boehringer Ingelheim can take action to cap the cost of inhalers at $35 in the United States and lower the list price of some of the inhalers it manufactures, these other companies can do the same."
In January, Sanders and other Senate HELP Committee members announced a probe into "the extremely high prices" that Boehringer Ingelheim, AstraZeneca, and other companies charge for their inhalers.
"We launched an investigation into big drug companies because the prices they were charging for inhalers just didn't add up," Sen. Tammy Baldwin (D-Wis.), a member of the HELP panel, wrote on social media Thursday. "And looks like we were right."
We launched an investigation into big drug companies because the prices they were charging for inhalers just didn’t add up.
And looks like we were right.
I’m glad to see some of the price gouging end and proud to help lower costs for Wisconsin families. pic.twitter.com/QluMNCSwJA
— Sen. Tammy Baldwin (@SenatorBaldwin) March 7, 2024
Boehringer Ingelheim was also facing scrutiny from the Federal Trade Commission (FTC). In November, the agency said it believes some of the company's patents "may have been improperly listed in the Orange Book," which includes products the agency deems safe and effective.
"Patents improperly listed in the Orange Book may delay lower-cost generic drug competition," the FTC wrote in a letter to Boehringer Ingelheim. "By listing their patents in the Orange Book, brand drug companies may benefit from an automatic, 30-month stay of FDA approval of competing generic drug applications."
On Wednesday, as Reutersreported, a class-action lawsuit filed in federal court by the Massachusetts Laborers' Health and Welfare Fund accused Boehringer Ingelheim of "improperly submitting patents to the U.S. Food and Drug Administration to delay generic competition and inflate prices for its lung disease drugs Combivent Respimat and Spiriva Respimat."
"As a result of Boehringer's wrongful Orange-Book-listing scheme, there [are], to this day, no affordable generic versions of either Combivent Respimat or Spiriva Respimat," the lawsuit states. "Payors must continue to pay for expensive brand-name products, instead of affordable generic products that should have been available years ago. This has caused payors, including the plaintiff, to suffer many millions, if not billions, of dollars in overcharges over the past three years."
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Progressives Rip Corporations for 'Using Inflation as a Cover Story to Jack Up Prices and Pad Profits'
"If our nation's leaders are serious about addressing inflation," said one union leader, "they'll hold these big corporations accountable for their price gouging."
Jun 10, 2022
In the wake of new federal data showing that U.S. inflation rose again in May after decelerating slightly the previous month, progressive lawmakers, economists, and union leaders on Friday tried to hammer home their argument that corporate profiteering is a major driver of the price hikes that are eroding workers' modest wage gains and heightening economic pain nationwide.
"While families are feeling the sting of soaring energy costs, oil and gas companies are cheering the nearly $100 billion in profits they've already made this year off families' pain at the pump," said Dr. Rakeen Mabud, chief economist at the Groundwork Collaborative.
"The same corporations that are making record profits while busting workers' unions are raising prices on working families."
"It's past time for Congress to pass an excess profits tax to stop the outrageous war profiteering by Big Oil," Mabud added, referring to the benefits the U.S. fossil fuel industry has reaped from Russia's assault on Ukraine.
The narrative that corporate greed is one of the key culprits behind inflation, which is now at a 40-year high, resonates greatly with the U.S. public, according to recent survey data. A poll conducted last month by Data for Progress showed that 71% of all U.S. voters blame corporate profit-seeking for rising inflation.
But despite the argument's popularity--and alignment with data showing that record-high corporate profits are a disproportionate contributor to inflation--the Biden administration has been increasingly hesitant to deploy it in recent months even as inflationary pressures persist and businesses' net incomes grow exponentially in some sectors.
During an event hosted by The New York Times on Thursday, Treasury Secretary Janet Yellen outright rejected the notion that corporate greed is to blame for inflation, saying, "Demand and supply is largely driving inflation."
Federal Reserve Chair Jerome Powell, meanwhile, has openly suggested that wage increases are part of the problem, telling reporters during a press conference last month that the country needs to "get wages down" in order to tackle inflation.
While progressive economists have acknowledged that a number of factors, from supply chain issues caused by the pandemic to the war in Ukraine, are pushing inflation to levels not seen in decades, they have nevertheless maintained that corporate profiteering is a significant culprit.
"Corporations are using inflation as an excuse to raise their prices, hurting workers and consumers while they enjoy record profits," Robert Reich, the former secretary of the U.S. Labor Department, wrote last month. "Prices are surging--but let's be clear: corporations are not raising prices simply because of the increasing costs of supplies and labor. They could easily absorb these higher costs, but instead they are passing them on to consumers and even raising prices higher than those cost increases."
Mary Kay Henry, president of the Service Employees International Union, echoed Reich on Friday.
"Make no mistake: the same corporations that are making record profits while busting workers' unions are raising prices on working families," Henry wrote on Twitter. "If our nation's leaders are serious about addressing inflation, they'll hold these big corporations accountable for their price gouging."
In recent weeks, as inflation numbers have remained stubbornly high and corporate executives have continued boasting about their profits, congressional Democrats have put forth several proposals aimed at combating price gouging and reining in excess profits via taxation.
Led by Rep. Ro Khanna (D-Calif.) in the House and Sen. Sheldon Whitehouse (D-R.I.), a group of Democrats and Sen. Bernie Sanders (I-Vt.) introduced legislation in March that would hit large and highly profitable oil companies with "a per-barrel tax equal to 50% of the difference between the current price of a barrel of oil and the pre-pandemic average price per barrel between 2015 and 2019."
While the White House has signaled it would be willing to support a windfall profits tax on Big Oil, Democrats' bill has not received a vote in the House or Senate.
Last month, Sens. Elizabeth Warren (D-Mass.) and Tammy Baldwin (D-Wis.) along with Rep. Jan Schakowsky (D-Ill.) unveiled a measure that would empower federal regulators to crack down on corporate price gouging. Warren has specifically called out the meat industry for its pricing practices throughout the pandemic.
"Giant corporations are using inflation as a cover story to jack up prices and pad profits," Warren tweeted Friday. "Let's pass my bill to crack down on corporate price gouging. And let's pass our windfall profits tax on Big Oil, which includes rebate checks for Americans struggling with gas prices."
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