GOP to business: Don't let Obama divide you

The Obama administration has long put more of an emphasis on reforming the corporate code, and released a proposed framework for doing so in February. 

Members of the Roundtable, a lobby for corporate CEOs, said this week that tax rate increases would need to be part of a tax-and-spending deal, a sudden break from their past stance that all current tax policies should be extended to give Washington time to overhaul the tax system. 

Key Republicans – like Camp and Hatch – pushed back on those statements, while also trying to use them to their political advantage. 

Obama and Democrats have tried to cast Republicans as beholden to the wealthy in the “fiscal cliff” debate, because of the GOP’s opposition to tax rate increases. But in populist tones, Hatch said this week’s events underscored that Republicans were on the side of small business, while the administration favored corporate America.

In Friday’s letter, Camp and Hatch also warned corporate executives that they could be jeopardizing key priorities like shielding foreign profits from taxation by teaming up with the White House.

“In endorsing the president’s push for higher tax rates, you are also risking some of your won priorities for tax reform – such as shifting from a worldwide to a territorial system and bringing our corporate rate in line with the OECD average” they wrote.

Republicans have also expressed concern about creating disparities between corporate and individual rates, with both now topping out at 35 percent. Obama has called for raising the top individual rate to 39.6 percent, while both Democrats and Republicans want to lower the corporate tax rate.

“Reforming some portions of the tax code but ignoring others will not only leave the code entangled with provisions that restrict businesses, but will leave out a huge sector of job creators, threatening to further hamper our small recovery,” Camp and Hatch wrote Friday.

The Roundtable has said that it is still committed to a comprehensive rewrite of the code. 

But the NFIB, a key small business lobby, has said that it’s easy for corporate executives to get on board with a tax rate increase that – unlike for small businesses – would hurt their personal bottom line but not their company’s.

NFIB officials have also said that pass-throughs also use some of the same tax breaks that would be on the table to help pay for a reduction of corporate tax rates, putting them at even more of a disadvantage.

Some Democrats still want a comprehensive tax reform, while others believe that, given the global competition, the corporate code needs assistance first. Meanwhile, Sen. Carl LevinCarl LevinA package proposal for repatriation Silencing of Warren another example of hyperpartisan Senate GOP going nuclear over Gorsuch might destroy filibuster forever MORE (D-Mich.) is among those pushing hard against a territorial system, which would protect most or all of a corporation’s offshore profits from U.S. taxation.