Kyrsten Sinema reportedly wants to block Democrats from narrowing the carried interest loophole benefiting rich investors

• Sinema wants to nix an effort to tighten carried interest from the Manchin bill, according to Axios and Politico.
• She's been known to harbor objections since last year on the tax measure that largely helps wealthy investors.

Sen. Kyrsten Sinema reportedly wants to knock out a provision in the $740 billion economic spending bill that benefits rich investors and hedge fund managers.

Politico and Axios reported that Sinema wants to nix a Democratic measure to narrow the carried interest tax loophole and add $5 billion in drought resiliency into the package.

A spokesperson for Sinema did not immediately respond to a request for comment. Without her support, Senate Democrats can't advance the package in the 50-50 Senate over GOP resistance. The party is employing a tactic known as budget reconciliation to avoid a GOP filibuster and pass the bill along party lines.

Eliminating carried interest is a goal that's eluded both Republican and Democratic administrations for a decade. Carried interest is the percentage of profits that hedge-fund managers receive from lucrative investments.

But that compensation is taxed at a lower capital gains rate that maxes out at 23.8% and doesn't face a higher income tax rate like most Americans pay on wages from their job. Critics argue it amounts to a major hole in the tax code.

The Arizona Democrat opposed efforts last year to either close or narrow the loophole. But that puts her on a collision course with another critical vote: Sen. Joe Manchin of West Virginia.

Manchin has expressed strong support for the measure. Last year, he joined two Senate Democrats in sponsoring a bill eliminating carried interest. "The only thing I was adamant about was the carried interest," he told reporters on Thursday.

On Wednesday, Manchin told reporters he "had not heard" reports that Sinema wanted Democrats to eject carried interest and no one had spoken to him about it.

Sinema has been publicly mum regarding her views on the legislation so far. On Wednesday, she told CNN's Morgan Rimmer that she was "taking my time" going over the bill.