Business groups back Obama on tax cuts, step up lobbying effort

Cheering President Obama, a number of Republican-leaning business groups are launching a lobbying blitz to pass the White House’s deal to extend the Bush-era tax cuts.

The U.S. Chamber of Commerce, the National Federation of Independent Business (NFIB) and the National Association of Wholesaler-Distributors (NAW), among others, are urging lawmakers to quickly pass the deal reached between the president and Senate Republicans.

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The White House has taken flak from liberals over the tax deal, but in contrast to some earlier policy battles, the administration is earning plaudits from business lobbyists.

“We are encouraged. That was quite a big step for him to take,” said Chris Walters, manager of legislative affairs at NFIB. “It was great to see him come out Monday and stick to his framework, even though it wasn’t what he said during the campaign.”

Other critics of the president also had kind words for him on Wednesday.

“This economy is not going to come back due to government policies. You have got to liberate the private sector. For recognizing that, the president deserves absolute credit,” said Jade West, NAW’s senior vice president of government relations.

Business groups are applauding the compromise reached between Obama and Republicans because it meets one of their major lobbying goals for this year: extending all of the tax rates established in 2001 and 2003.

Though temporary, extending those tax cuts should allow businesses to start investing and hiring again to boost job growth, the groups said.

The package includes a number of other elements that business lobbyists had long sought.

Attached to the deal, for example, is a compromise on the estate tax that sets a 35 percent tax rate and excludes individuals with assets worth less than $5 million. The NFIB and the American Farm Bureau Federation has been lobbying for that exact compromise since last year.

Without legislative action, the estate tax will return next year to its pre-2001 levels, with a $1 million exemption level and a 55 percent tax rate.

Pat Wolff, a tax specialist at the Farm Bureau, said approving the deal on the estate tax would provide certainty to farmers and ranchers who are nervous because of the tough economic times.

“I think people have taken note of the president stepping up to pass much-needed legislation when others would rather take political jabs at each other,” Wolff said, calling the compromise “substance.”

“It is time for some real legislation in real time,” Wolff said.

Also attached to the compromise are the so-called tax extenders, which are incentives and credits popular with business groups. The compromise includes an extension of a research-and-development tax credit.

In a statement Tuesday, National Association of Manufacturers President and CEO John Engler commended the president on the deal and said the R&D tax credit, among others, is “key to manufacturers’ competitiveness and ability to create jobs.”

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Another measure included in the tax deal is a 100 percent tax deduction through 2013 for businesses to buy equipment. That provision could be a boon for tech firms, since businesses will likely purchase more computers and software and then deduct their costs, according to Ralph Hellmann, senior vice president of government relations at the Information Technology Industry Council.

“You are going to get full deductibility. That has never been done before,” Hellmann said. “It could be a very powerful incentive.”

Hellmann said his trade group is giving “full-throated support” to the deal and is already rounding up votes in the House and the Senate for the package. Other business groups are lobbying hard as well.

The Tax Relief Coalition — made up of the Business Roundtable, the Chamber, NFIB and NAW, among others — sent a letter to lawmakers Wednesday urging them “to act expeditiously to enact the compromise tax proposal announced this week by the president and leaders in Congress.”

Hellmann said the president’s willingness to make the tough call on the expiring tax cuts could help ease the tension between business and this White House.

“This is a very good first step,” Hellmann said.

Others agreed.

“We are encouraged that the president and Congress were able to reach a compromise, long overdue, on expired and expiring tax provisions that have been the law of the land for a decade and longer, and we are encouraged to finally see a trade agenda being advanced by the administration, after declaring the need to double exports in five years,” said Blair Latoff, a Chamber spokeswoman.

The tax deal, along with pushing the Korean free trade agreement, should help the Obama administration somewhat in dealing with business groups somewhat next year as they confront more long-term issues.

“These are signals that on other bigger issues, like the deficit and tax reform, that the administration is going to play. And Republicans will be willing to negotiate if they believe President Obama will negotiate in good faith, like he has done on this package,” Hellmann said.