Kyrsten Sinema was doing the GOP a favor by blocking Democrats' taxes on the wealthy. Now a Republican-controlled House will have to fight that battle.

chuck schumer kyrsten sinema on an escalator together
Senator Chuck Schumer, D-N.Y., and Sen. Kyrsten Sinema, D-Ariz., arrive for the closed briefing on election security in the Capitol on Wednesday, July 10, 2019Bill Clark/CQ Roll Call via Getty Images
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  • Sen. Kyrsten Sinema repeatedly threw cold water on Democrats' plans to raise taxes on the wealthy.

  • Now that Sinema is officially becoming an independent, Democrats still likely won't be able to pass anything.

  • That's because Sinema's move comes as tax-averse Republicans assume the House.

Taxes on the rich just saw a major opponent move aside.

As popular as tax hikes for the wealthy are with Americans — and they're very popular — Democrats tried and floundered to pass any in the first two years of the Biden administration. That's because one roadblock stood in their way: Kyrsten Sinema, a centrist senator from Arizona. Now, Sinema has cemented her contrarian status, renouncing her Democratic affiliation to become an independent.

Having her out of the party could've opened the door to more sweeping tax reforms in party-line reconciliation. However, the House — which has to pass any legislation that would include hikes — will soon be controlled by Republicans. They'll likely take over the anti-tax mantel Sinema carried.

"This doesn't change much in terms of prospects for tax policy. The Republicans have already won their goal of gridlock with control of the house," Chuck Collins, the director of the Program on Inequality and the Common Good at the left-leaning Institute for Policy Studies, told Insider.

Democrats have repeatedly proposed a suite of different tax measures to offset spending, from raising taxes on the biggest corporations and the wealthiest Americans to closing a loophole that benefits private equity investors. And President Joe Biden has long been a proponent of raising taxes on the wealthiest Americans and big corporations, saying it's time for them to pay their fair share.

"I'm not trying to punish anybody. But damn it, maybe it's because I come from a middle-class neighborhood, I'm sick and tired of ordinary people being fleeced," Biden said in remarks on his American Jobs Plan proposal in April 2021.

Raphael Warnock's reelection in the Georgia runoff also gave Democrats an opening to work around Sinema. His victory meant that, prior to Sinema's announcement, Democrats would have a 51-49 majority — meaning the possibility of passing a reconciliation package without one of the party's two centrists standing in the way.

Taxes were one key arena where Sinema and fellow centrist Sen. Joe Manchin differed, with Manchin previously asking her to reconsider her position on some hikes.

"On taxes, Manchin was much more supportive of raising revenue from corporations and the wealthy, and Sinema was particularly resistant to raising corporate tax rates," Frank Clemente, the executive director of the left-leaning Americans for Tax Fairness, told Insider.

Republicans are very tax averse, already mounting opposition to a 15% minimum tax on big multinational corporations like Amazon and Facebook. Any legislation handed down to them that included anything close to a minimum income tax on billionaires likely won't fly.

"We think that people like us should pay as we make money and become more wealthy,"Morris Pearl, the chair of ultra-wealthy pro-tax advocacy group the Patriotic Millionaires, and former managing director of BlackRock, told Insider. He added of Sinema: "If she disagrees with that, I'd be interested in knowing why she disagrees with it and why she thinks people like me should pay lower tax rates than she and her staff do. But I've not yet heard that explanation."

The result of resistance to any substantive tax reforms is that many of former President Donald Trump's tax policies remain intact, even with Democrats technically holding the presidency and both chambers of Congress for two years.

The interesting question now, Clemente said, is what Republicans choose to do with that.

"Are they going to try and put up a renewal of the Trump tax cuts in the next Congress or not? Are they going to tee that up?" Clemente said. "That's the more interesting dynamic."

Read the original article on Business Insider