Nicole Weisensee Egan February 14, 2018
Epic lobby effort led to big win on an issue long sought by corporate interests in WashingtonSupport this Journalism. Become a member.
The grand-prize winners of the new tax law are U.S. corporations that now enjoy a 21 percent tax rate, down from 35 percent. It’s a plum the business lobby in Washington has had on its bucket list for years.
The new rate could save U.S. companies more than $1.3 trillion over ten years, according to CNBC. It’s worth remembering that companies rarely paid the top rate due to complex tax maneuvering and sheltering of profits in offshore accounts. Advocates say the new law promises to simplify the process and spur the repatriation of billions of dollars stashed overseas.
Nobody represents the face of the business community on the issue more than U.S. Chamber of Commerce President and CEO Thomas J. Donohue. The trade association, a sentinel and policy warrior for three million American companies (including its largest), sits a few strides from the White House.
Produced by Joey Rettino
“Our country will reap the benefits of this once-in-a-generation achievement for years to come,” Donohue said in a statement after the bill’s passage. “When this legislation is signed into law, Americans will see bigger paychecks as well as more opportunities for jobs and for energy development from Alaska.”
Donohue himself was listed as the Chamber’s top in-house lobbyist on tax reform (as well as other issues) in financial disclosure forms filed for the first three quarters of 2017. It’s a job for which he gets paid handsomely. Donohue earned nearly $6.6 million in 2015, according to the most recent reports filed with the IRS.
The U.S Chamber isn’t shy about the lengths it went to ensure the bill’s passage by:
The biggest beneficiaries of the new tax law are likely to be construction and retail, which have historically had the highest effective tax rates, at 27 percent, according to a US Treasury analysis.
The bill also eliminated the corporate Alternative Minimum Tax, which makes it possible for some businesses to lower their rate further through the use of various deductions.
The Business Roundtable, an association of chief executives at big U.S. companies, also released a flight of TV ads featuring local business leaders talking about how tax reform would help them. One featured Carl Satterwhite, president and owner of RCF Group, a furnishings, architectural interiors and facility services firm that is based in West Chester, Ohio, and employs 100 people. His company is a supplier for Procter & Gamble, a Business Roundtable member company.
“I’m proud to run a minority-owned business,” Satterwhite says in the 30-second spot. “We want to continue to invest, grow and create jobs. The current tax code is really just a restraint. Tax reform is a game changer. We’ll be able to invest and hire more workers. It’s time for Congress to deliver real tax reform.”
The ads were part of a multi-million-dollar nationwide blitz by the Business Roundtable that also included radio spots in 30 media markets across 16 states, as well as social media and digital ads.
It was clear that tax reform was a top priority for businesses last year. More than half of the 11,000 registered lobbyists in Washington, D.C., worked on issues involving tax reform during the first three quarters of last year, says Public Citizen, which analyzed data provided by the nonpartisan Center for Responsive Politics.
“It’s an astronomical number,” Taylor Lincoln, research director of the Congress Watch division of Public Citizen, told Tarbell. “When you have an astounding number of lobbyists like 6,200 blanketing the town, policymakers, even if their intentions were the best—and I don’t think they were—don’t have a chance. It shows, in a way, that the system is screwed up.”
Corporations went to these extremes because the stakes were so high, one lobbyist familiar with the campaign told Tarbell.
“If you don’t go up and tell your story and don’t spend a lot of money to have that story told it could have serious financial implications,” the lobbyist, who describes his work as a “slash between an educator and a salesman,” said. “And because it’s a tax-law change it goes on forever.”
The real work on the issue truly began in earnest in July, said the lobbyist. “It involves meeting with members of Congress and their staff, potentially members of the administration with jurisdiction in this area, Treasury, those kinds of folks and making your case,” he says. “This is more about riding the wave and trying to steer than changing the whole direction.”
Unsurprising, the organization hiring the most lobbyists to work on tax issues was the U.S. Chamber of Commerce, with 100 bodies, according to the Public Citizen report, costing more than $58 million, according to the Open Secrets database. The Business Roundtable employed 51 influence peddlers working Capitol Hill and spent $10 million.
Despite the impressive manpower hired by their umbrella organizations, individual corporations still used their own resources to flood the Hill with their own lobbyists.
Five of them, including Comcast, Anheuser-Busch, Verizon, Microsoft, and Altria Group hired at least 15 different firms to work on tax issues, according to the Public Citizen report.
That’s not all.
Lobbyists working on issues related to taxes donated $9.6 million to members of Congress during the first nine months of 2017, another report by the Center for Responsive Politics found.
Eighteen lawmakers received more than $100,000 in political contributions from tax-lobbying donors. House Speaker Paul Ryan (R-Wis.) and Sen. Orrin Hatch (R-Utah), with $357,200 and $314,974 respectively, were the largest recipients, according to the center’s analysis.
Hatch is chairman of the Senate Finance Committee, which oversaw the tax reform bill.
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