Last year was a boon for lobbyists working on the sweeping $1.4 trillion tax overhaul, and 2018 will likely keep their schedules packed as the administration works out how to implement the law.
In total, more than 60 percent of the Washington lobbying corps worked on tax issues in 2017, according to an updated report from the advocacy group Public Citizen released Jan. 30. To put that in perspective, Public Citizen says that totals more than 7,000 lobbyists, or 13 for every member of Congress.
D.C. lobbying activity was the highest in seven years, with 2017 expenditures totaling $3.34 billion, according to the Center for Responsive Politics. But while groups from beer brewers to Sesame Street had an interest in the largest tax bill in a generation, it was the major industry organizations that poured the most lobbying resources into the GOP-led bill, and many are taking a victory lap after spending millions of dollars in the final weeks of the legislative process.
“We never want to give ourselves 100 percent because you can always do better, but in terms of the things we were looking for at the outset, this is very successful,” said Chris Netram, vice president of tax policy at the National Association of Manufacturers.
The overhaul bill may be in the books, but it will take years for the administration and Congress to fully implement the law and smooth over any rough spots in the legislative language. That means lobbyists will stay busy working to tweak its provisions.
“For us, getting this done is fantastic, but it’s sort of like the end of the first quarter,” said Caroline Harris, vice president of tax policy at the U.S. Chamber of Commerce.
Lawmakers will likely need to draft a technical-corrections bill to fix any errors or loopholes left as Congress rushed to pass the legislation late last year. That effort won’t be easy, though, as the measure would need 60 votes to pass the Senate. Delays in moving a corrections bill mean lobbyists will focus on the regulatory process in the short term as the IRS implements the tax bill.
Lobbyists will likely push Congress to extend various tax breaks lawmakers had to make temporary to fit the tax legislation into the $1.5 trillion limit required by Senate rules, as well.
The National Association of Manufacturers spent $2.4 million in the last quarter of 2017, compared to $1.3 million in the third quarter, according to lobbying-disclosure data. Netram said manufacturers scored a major victory when lawmakers preserved a repeal of the corporate alternative minimum tax in a last-minute Senate vote. The combination of the corporate AMT and a lower corporate tax rate would have rendered the tax break for research and development ineffective, he said.
The Business Roundtable, an association of chief executive officers of some of the country’s largest corporations, cited various tax issues when it reported $17.4 million in lobbying expenses for the fourth quarter of 2017, more than three times the $4.5 million spent in the previous quarter. On an annual basis, the Roundtable shot up from No. 10 in spending for 2016 to No. 3 for 2017.
The U.S. Chamber of Commerce spent more on lobbying overall in 2017 than any other group, reporting $82.1 million in expenditures for the year. Lobbying spending for the Chamber rose from $13.1 million in the third quarter to $16.8 million in the fourth quarter for 2017 as the business group successfully pushed to preserve the corporate-tax-rate cut proposed by lawmakers from 35 percent to 21 percent.
“We put every asset we had into it, because that’s what the membership wanted, that’s what the business community wanted, and I think the result of that is evident,” Harris said.
Disclosure rules don’t require groups to say how much they spend on an individual issue, but each of the industry organizations cited the tax-overhaul bill, as well as other tax issues, on their disclosure forms. It is also common for lobbying to ramp up across the board during the first years of a new administration.
The National Association of Realtors spent big on lobbying as the tax negotiations drew to a close, flying in realtors to Washington and running ads to pressure lawmakers to change several provisions from the original House version, such as one limiting a tax exemption on capital gains when homeowners sell their primary residence. NAR also fought a House proposal to cap the mortgage-interest deduction at $500,000. They won on both of those points, preserving the exemption and moving the deduction cap to $750,000 in the final version.
To help get those results, NAR—one of the country’s largest trade associations by membership—doubled its lobbying spending in the last quarter of 2017 to $22 million, compared to $11 million in the third quarter.
Now, the realtor group is working to soften certain parts of the new tax law, hoping to index the $10,000 cap on the state and local tax deduction and the mortgage-interest-deduction cap to inflation as the IRS begins the implementation process, said Jamie Gregory, deputy chief lobbyist at the NAR.
“We’re starting to do the homework on that right now,” Gregory said.
Most of the overhaul bill’s temporary tax breaks are on the individual side of the code, but an expansion of certain depreciation rules and a tax break for craft brewers have will expire in the coming years. And some of the law’s pay-fors have yet to kick in, giving an incentive for lobbyists to make sure they never do. The tax law will further limit how much businesses can deduct from corporate-debt-interest payments after 2021.
Outside of the tax overhaul’s orbit, Gregory said realtors will focus on pushing the Senate’s tax-extenders bill, which renews a collection of temporary tax breaks, including a provision exempting certain mortgage-debt forgiveness from income tax. Renewable-energy lobbyists will also be hard at work on the extenders bill and its tax breaks for biofuels.
In the long term, Netram said his group will push for more regular tax-overhaul bills, prodding Congress to examine the code every three years.
“We can’t go another 31 years before revisiting our tax code,” he said. “We need to constantly reassess to see where we are.”