By Kevin Bogardus and Bernie Becker - 04/26/11 11:18 PM EDT
Corporate tax reform has been big business for K Street this year.
A review of lobbying disclosure records shows that more than 80 companies, lobby firms and trade groups have lobbied on plans that could lower corporate tax rates at the expense of loopholes and subsidies that are beneficial to many businesses and industry sectors.
The companies lobbying on tax reform include many of the biggest names in the business world, including Caterpillar, ExxonMobil and Intel, according to records.
Scott Hodge, the president of the Tax Foundation, noted that lobbying on tax policy is routine. But he added that with billions of dollars a year in tax expenditures on the books, it is not surprising that companies would want to try and make sure their favored tax breaks don’t lose out.
“Naturally, many companies might perceive tax reform as a threat to various tax benefits, and are afraid of being essentially a loser in the process,” said Hodge, whose group favors a simpler tax code featuring lower rates. “Others will see it as a chance to be a winner.”
Corporate tax reform seems to be an area where Republicans and Democrats might find common ground. Top officials in both parties say they see the need for lower rates and a broadening of the tax base.
But the question of which credits and deductions would need to be scrapped to help offset the lower tax rates is sure to be hotly debated — and lobbied on.
Some companies and trade groups want the U.S. to move to a territorial tax system, which would essentially only tax corporate profits made within American borders. Multinationals now have to pay taxes when they bring offshore funds into the U.S.
Silicon Valley is also lobbying heavily on tax reform.
“We are now moving beyond slogans and into details,” said Ralph Hellmann, senior vice president of government relations for the Information Technology Industry Council.
Hellmann said the tech trade group favors a top corporate tax rate of 25 percent, down from the current 35 percent rate, as suggested by House Ways and Means Committee Chairman Dave Camp (R-Mich.). The group is also in favor of the switch to a territorial tax system.
“That is definitely moving in the right direction. We are prepared to give up some deductions to get there. We are now figuring out what those tradeoffs might be,” Hellmann said. “We want a tax system that is competitive.”
While tech wants a tax system that is competitive globally, Hellmann said his trade group wants to keep an R&D tax credit in place, as well as protections for intellectual property.
“In the end, we want a system that still promotes research and development and protects intellectual property,” Hellmann said.
The action on corporate tax reform has boosted lobby firms that specialize in tax policy.
The Washington Tax Group, for example, reported lobbying on “issues related to international corporate tax reform” for at least eight companies, including Caterpillar, Coca-Cola and Pfizer, according to lobbying disclosure records.
Greg Nickerson, once tax counsel for former House Ways and Means Committee Chairman Bill Thomas (R-Calif.), and Jan Fowler, once an aide to former House Ways and Means Committee ranking member Jim McCrery (R-La.), head up the firm.
Officials at the American Petroleum Institute, a top oil-and-gas trade group, said their members were still discussing corporate tax reform and had yet to arrive at a position on the issue.
The industry has consistently pushed back, however, on proposals from President Obama and others to roll back the deductions oil-and-gas firms receive.
While business might get on board with the administration’s tax reform plan, labor is likely to be a harder sell. Chuck Loveless, legislative director for the American Federation of State, County and Municipal Employees (AFSCME), said it is “a false tradeoff” to lower corporate tax rates by reducing tax expenditures.
“There’s certainly no need to trade off reduced tax rates for corporations by reducing the tax expenditures that would hit ordinary working Americans. That’s another false tradeoff,” Loveless said. “AFSCME supports a federal tax system that is progressive and we support more progressivity. We don’t help progressivity by reducing corporate tax rates and reducing tax expenditures that benefit working Americans.”
Loveless said the public-worker union would like to eliminate or reduce several tax expenditures, such as preferences for the oil-and-gas industry, and would like to see higher taxes on capital gains and dividends.
One expenditure AFSCME wants to protect is the tax exclusion for employer-sponsored healthcare plans.
“We believe its elimination will inevitably lead to most employers curbing or eliminating employer-provided healthcare. We also think it would be a direct hit on middle-income Americans,” Loveless said.
— Rachel Leven contributed to this report.