Another day, another tax-reform coalition. Over the last five months, corporations have launched a handful of groups to advocate an overhaul of the tax code, spending cash to promote changes or defend deductions even though Congress appears as unlikely as ever to tackle the issue.
They’re snatching up big-name policy wonks and ex-officials to front their causes, including former Congressional Budget Office Director Douglas Holtz-Eakin. They’re blanketing the Hill to talk to rank-and-file members (not just the tax writers) about breaks they want to preserve.
And coalitions such as LIFT America (formed just this spring) are acting as cheerleaders and boosters of the "tax-reform tour" put together by Senate Finance Committee Chairman Max Baucus, D-Mont., and Rep. Dave Camp, R-Mich., chairman of the Ways and Means Committee. The tour kicked off in Minneapolis last week with a visit to a bakery and 3M—a member of LIFT—in an effort to build public support outside Washington for changing the tax code.
The groups are so numerous and varied at this point that listening to their pitches could fill a full week of a congressional staffer’s calendar. And that’s on purpose: Their abundance, combined with veteran business groups including the Business Roundtable, the U.S. Chamber of Commerce, or RATE, another tax-reform advocacy coalition, is meant to give the impression that tax reform is well supported and inevitable. Still, basic questions remain, such as whether a tax overhaul will ultimately receive the support of top congressional leadership, or whether money raised from changing the code should be used to pay down the deficit or reduce tax rates.
But those messy questions are best left to the politicians, as members of the various coalitions often say. “I think it’s important education,” said Holtz-Eakin, when asked about the role of the myriad tax groups. He now speaks on behalf of ACT, a group of 42 companies pushing for a lower corporate tax rate of 25 percent as well as a new international tax system.
Instead, these tax groups are in the business of advocating for specific policy agendas, be it lowering the corporate tax rate by eliminating yet-to-be-determined breaks, or moving to a new type of international tax system or by protecting niche provisions, such as interest deductibility, breaks for intangible income, or benefits for oil and gas.
Just take the last two weeks as an example of the proliferation of tax groups. A new group, called the Performance Based Building Coalition, hosted a two-hour lunch in the Rayburn House Office Building to educate staffers, lobbyists, and reporters on the importance of tax-exempt bonds to local infrastructure projects. It was all deli sandwiches and photos of a courthouse in Long Beach, Calif., built with the help of such bonds.
The American Petroleum Institute took out print advertisements in local Minnesota papers to herald the first stop on the Baucus-Camp tax-reform tour and to show it was engaged in the process. “We certainly take Chairman Camp and Chairman Baucus at their word,” says Brian Johnson, the director of federal relations for API, who says his group has been gearing up for tax reform for months.
The TIE Coalition, formed just a few weeks ago, is doing “Lobbying 101,” says Mark Nebergall, a member and the president of the Software Finance and Tax Executives Council. That means walking the halls of Congress to talk to aides and members and releasing a study by a well-respected professor at the Tuck School of Business at Dartmouth, Matthew Slaughter.
LIFT has even offered to help lawmakers with any tax-reform issues or questions during the August recess—from arranging visits to its corporate members to helping Baucus and Camp with media or education around their tax-reform tour. “We’re active along those lines,” says Claire Buchan Parker, a LIFT spokeswoman and a former deputy White House press secretary under President George W. Bush.
But it’s the focus by many of the new groups on lobbying around highly specific provisions that makes this generation of tax advocates different from the last. Instead of just pushing for broad ideas such as lower corporate tax rates, some new groups, such as BUILD, are fighting to preserve individual provisions. In BUILD’s case, the whole coalition is centered on the idea of protecting interest deductibility.
Moving forward, the question is whether these groups will remain on the sidelines as cheerleaders or advocates of tax reform, or if they will splinter off and start to fight among themselves over the fate of specific provisions—company by company, and industry by industry—if and when one of the tax-writing committees produces legislation.
For now, as the former staff director of Ways and Means says, the groups are both a help and a hindrance. “The members do need to understand how it will affect key market participants,” says Jonathan Traub, now the managing principal of Deloitte's Tax Policy Group. “On the other hand, you have people advocating for the protection of a particular item or expenditure or deduction or credit in isolation, without considering the impact of changing it in the context of lowering rates. That can provide an incomplete picture.”