Volumes of tax regulations are stacked on the dais as the House Ways and Means Committee begins the markup process of the GOP's far-reaching tax overhaul, the first major revamp of the tax system in three decades, on Capitol Hill in Washington, Monday, ...
WASHINGTON – One powerful group was noticeably scarce from the flurry of activity inside the congressional committee room where Republicans recently took a big step toward passing their sweeping tax overhaul.
The lobbyists who swarmed 1100 Longworth this week – the House Ways and Means panel room where lawmakers last tackled a tax code rewrite three decades ago – had thinned to a relative trickle. The K Street crowd chalked up their absence to new modes of communicating with lawmakers and aides.
But lobbyists also point to another big factor that could jeopardize the signature domestic push by President Donald Trump and the GOP: Republicans are moving at such a breakneck pace that corporations with billions of dollars to gain or lose from the revamp still haven’t determined their fate. That leaves them without a clear plan of action to strike out against the loss of breaks they cherish or complicated new taxes on their operations – or a game plan to rally behind changes that benefit them.
“It’s very hard to keep up with the House process and the changes in some of the most complex provisions,” said Cathy Koch, Americas Tax Policy leader at EY. “The ground keeps shifting. Many companies are still struggling to calculate the net impact on their business, their markets, their workers, and their consumers.”
The House and Senate tax measures share a focus on slashing the burden on business. But many businesses aren’t yet sold on the proposals, fracturing the traditional Republican coalition that has helped send major legislation over the finish line during previous high-profile fights. The lack of unity among would-be corporate allies could spell trouble for the tax effort at a time when Republicans, and Trump, are desperate for a legislative accomplishment they can tout on the campaign trail next year.
The GOP timeline is aggressive – the Ways and Means Committee approved its bill Thursday after it was introduced a week ago and plans to vote on the proposal next week. Senators unveiled their draft this week and say they want to pass it by the end of the year.
Trouble was evident from the start as the National Association of Home Builders and the National Association of Realtors declared their instant opposition to the House bill. The groups argue that the proposal removes incentives for owning a home in part by capping the write-off for mortgage interest and limiting the deduction for state and local taxes.
The NAHB is planning to fly more than 100 of their members to Washington next week to make its case. “We want members of Congress to look their friends in the eyes and tell them why they can’t support housing and homeownership,” NAHB President Jerry Howard said.
But the GOP scored a coup when the National Federation of Independent Business, the potent small-business lobby that initially lined up against the House bill, decided to back the version that emerged from the Ways and Means Committee on Thursday.
Chairman Kevin Brady, R-Texas, tweaked the treatment of businesses that file on the individual side of the code to make more small firms eligible for a lower rate. “We are very grateful to Chairman Brady for listening to our concerns and working with NFIB to ensure that tax reform benefits the greatest possible number of American small business owners,” NFIB President and CEO Juanita Duggan said in a statement.
Other big-business behemoths including the U.S. Chamber of Commerce, the Business Roundtable and the National Association of Manufacturers are backing the rewrite, despite some reservations.
“We never said the bill was perfect and couldn’t be improved,” Neil Bradley, the chamber’s chief policy officer, said. “But because it meets our threshold principles and is pro-growth, we’ve been very supportive. This is an all-hands-on-deck push.”
The headlong rush to passage has sidelined, for now, much of what would otherwise be – and may yet become – the bill’s corporate cheering section. “You’ve got Republican majorities in Congress and a Republican president that all came together on a framework to reform the tax code, and nobody wants to be against that,” said one lobbyist who spoke on the condition of anonymity to offer a candid assessment. “The problem is the process has really backed everybody into a corner.”
Lobbyists close to the process also note a striking lack of coordination with the administration, which under Republican control has typically played a more assertive role in rallying business community support for key initiatives. The office of House Majority Whip Steve Scalise, R-La., has instead stepped in, conducting briefings before major steps in the rollout of the plan and hosting an 8:45 a.m. daily conference call with representatives from allied conservative groups and business lobbyists.
For his part, Bradley said he doesn’t “have a ton of sympathy for those who complain about the speed. We’ve been waiting on this for 31 years. . . . This is game time and you’ve got to step it up.”
The chamber also has said that it intends to use its considerable political muscle to reward or punish individual Republican lawmakers based on how they line up. “This is pretty much a litmus test for whether or not when you have the opportunity you can deliver on pro-growth policy. . . . Failure is not an option, and we’ll hold people accountable.”
The House and Senate bills approach the $1.5 trillion limit for adding to the deficit over the next decade, a red line they can’t blow through without breaking Senate budget rules allowing the upper chamber to approve the measure without Democratic support. That equals the cost alone of slashing the corporate rate from 35 to 20 percent – which both versions, do, though the Senate plan saves $100 billion by delaying the cut for a year – meaning tax writers have had to scour the code for new sources of revenue to pay for the rest of their wish-list of cuts for other businesses and individuals.
The hunt for that money has led lawmakers into uncharted territory. The original House Republican bill included a new excise tax on payments between certain subsidiaries of multinational corporations. It raised an estimated $154.5 billion, and GOP tax writers said it would discourage globe-spanning companies from sending their U.S. profits abroad.
But an array of U.S. and foreign-based companies with extensive U.S. operations cried foul, arguing that the move would discourage investment here – and likely violate international tax treaties to boot.
Republicans on the tax-writing panel tweaked the provision twice over the course of the week.
November 10, 2017 GOP test: Expiring tax cuts would mean little bang for buck
November 10, 2017 Wealthy homebuyers already figured out how to game the GOP tax plan
November 9, 2017 Highlights of House, Senate GOP plans to overhaul tax code
November 9, 2017 Senate GOP tax bill would delay biz cut, undo deductions
November 9, 2017 “I don’t feel wealthy”: The upper middle class is worried about paying for the tax overhaul
But not enough to satisfy many stakeholders, who still remain opposed to the bill. “The way the amendment was written still violates tax treaties and reaches into global profits that other jurisdictions feel is their prerogative,” said Nancy McLernon, who heads the Organization for International Investment, which represents firms headquartered abroad with major U.S. footprints, including Anheuser-Busch, GlaxoSmithKline, Siemens and Unilever.
The process, McLernon said, is moving “way too quickly.”
Other industry groups are publicly holding their fire. Many applaud the chopped corporate rate while laboring behind the scenes to preserve favored deductions. Consumer bankers, for example, are protesting the elimination of certain write-offs, including for premiums that banks pay to the Federal Deposit Insurance Corp., and life insurers are working to defeat a move to raise taxes on their reserves.
In a characteristic statement Thursday, American Council of Life Insurers President and CEO Dirk Kempthorne thanked Republican leaders for committing to “address unintended consequences for the life insurance industry and its policyholders” and said his group would continue to work with them.
The Washington Post’s Mike DeBonis contributed to this report.
business casual business business insider business lease business english business model canvas business attire business formal business class business focus