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This report was written by David Sirota and Andrew Perez.<\/em><\/p>\n\n\n\n Democratic Sen. Joe Manchin on Monday began raising objections<\/a> to President Biden\u2019s legislation to fund infrastructure investments by raising the corporate tax rate to 28 percent. Derailing the tax hike would be a lucrative gift to both corporate CEOs in general, and to private equity giants whose executives bankrolled the lawmaker\u2019s 2018 campaign and funded a super PAC that boosted his closely contested reelection bid.<\/p>\n\n\n\n On Monday, Manchin discussed<\/a> Biden\u2019s infrastructure plan with West Virginia MetroNews, and declared: \u201cIf I don\u2019t vote to get on it, it\u2019s not going anywhere.\u201d<\/p>\n\n\n\n \u201cAs the bill exists today, it needs to be changed,\u201d Manchin said<\/a>. While Biden\u2019s plan calls for raising the corporate tax rate from 21 percent to 28 percent, Manchin said he believes the corporate tax rate should be closer to 25 percent for the U.S. \u201cto be competitive.\u201d<\/p>\n\n\n\n On Monday, Sen. Ron Wyden, D-Ore., told reporters<\/a> that the Democratic caucus and the Senate finance committee will work together to set a final corporate tax rate figure. But Manchin\u2019s proposed change would have a huge impact on how the Biden infrastructure plan is paid for<\/a>, while largely preserving a tax policy that is delivering a disproportionately huge windfall to a tiny handful of executives at major corporations.<\/p>\n\n\n\n Last month, The Daily Poster<\/em>reported<\/a> on a recent study by Grinnell College economist Eric Ohrn showing that for every dollar that publicly traded firms reap from corporate tax cuts, \u201ccompensation of the firm\u2019s top five highest paid executives increases by 15 to 19 cents.\u201d That study preceded last week\u2019s revelations that 55 publicly traded corporations<\/a> paid zero corporate taxes last year.<\/p>\n\n\n\n Manchin\u2019s move could also particularly benefit private equity firms that have converted from partnership structures to C Corporations to take advantage of President Donald Trump\u2019s tax law, which dropped the corporate tax rate from 35 percent to 21 percent. <\/p>\n\n\n\n Such conversions allow private equity firms to attract capital from a wider array of institutional investors<\/a> who may not have been permitted to invest in partnerships. But private equity firms had not converted until a lower corporate tax rate made the switch even more profitable. The conversions are effectively<\/a>permanent<\/a>. <\/p>\n\n\n\n Ares Management was the first private equity giant<\/a> to convert<\/a> from a partnership structure to a C Corporation. The firm\u2019s executives were together among his top donors during his 2018 reelection bid. In all, they funneled more than $21,000<\/a> to his reelection campaign that year, according to federal records<\/a> reviewed by The Daily Poster<\/em>.<\/p>\n\n\n\n Data compiled by OpenSecrets show that was part of more than $212,000<\/a> that the private equity and investment industry delivered to Manchin during an election cycle in which he was given<\/a> a \u201csmall business investment\u201d award by a major private equity group that has been lobbying on tax issues<\/a>.<\/p>\n\n\n\n The Blackstone Group<\/a> and the Carlyle Group<\/a> have also converted from partnerships to C Corporations. Executives from those firms donated<\/a> $4.4 million to Senate Democrats\u2019 super PAC, Senate Majority PAC, during the last two election cycles, including $1.3 million in 2018 when Manchin was reelected with the group\u2019s support<\/a>.<\/p>\n\n\n\n Changing the tax rates now could eat into these private equity firms\u2019 profits. Ares, Blackstone, and Carlyle have all<\/a> recently<\/a> lobbied<\/a> on federal tax issues, according to the most recent federal disclosures.<\/p>\n\n\n\n While Manchin has been fighting to keep the corporate tax rate low, Ares has been explicitly warning<\/a> investors that \u201cany substantial changes in domestic or international corporate tax policies, regulations or guidance, enforcement activities or legislative initiatives may adversely affect our business.\u201d <\/p>\n\n\n\n There was initially talk of Biden\u2019s tax plan including provisions to close the so-called private equity tax loophole, but that language was excluded<\/a> from the initiative. <\/p>\n\n\n\n This newsletter relies on readers pitching in to support it. If you like what you just read and want to help expand this kind of journalism, consider becoming a paid subscriber by clicking this link<\/a>.<\/strong><\/em><\/p>\n\n\n\n Got this email from a friend? Click here to subscribe.<\/strong><\/em><\/p>\n\n\n\n Subscribe now<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" The senator’s move to block Biden’s higher corporate tax rate could shield private equity firms whose executives boosted his campaign and bet big on Trump\u2019s tax bill. David Sirota\u00a0and\u00a0Andrew Perez April 6, 2021 (The Daily Poster) Photo credit: Leigh Vogel\/Getty Images This report was written by David Sirota and Andrew Perez…. Continue reading
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