Comprehensive Tax Reform Kicks Off Lobbying Frenzy

Speaker of the House John Boehner waits for the next congressman to swear into office at a ceremonial swearing in in the Rayburn Room of the Capitol on Wednesday, January 5, 2011.
National Journal
Billy House
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Billy House
Oct. 23, 2013, 2 p.m.

Hun­dreds of cor­por­a­tions and busi­ness groups — from Fe­d­Ex to Wal-Mart — have been spend­ing mil­lions of dol­lars on lob­by­ing the Obama ad­min­is­tra­tion and Con­gress on com­pre­hens­ive tax re­form.

“What’s the old ad­age? If you’re not at the table, then you’re prob­ably on the menu?” sug­gests Lee Drut­man, a seni­or fel­low at the Wash­ing­ton-based Sun­light Found­a­tion, a non­profit, non­par­tis­an gov­ern­ment-watch­dog or­gan­iz­a­tion.

This table was set last fall, when Ways and Means Com­mit­tee Chair­man Dave Camp, R-Mich., an­nounced un­equi­voc­ally that his pan­el would write, mark up, and pass ma­jor tax-re­form le­gis­la­tion in 2013. Then, Speak­er John Boehner said over­haul­ing the un­wieldy tax code was one of the highest pri­or­it­ies.

The menu cer­tainly holds im­plic­a­tions for in­di­vidu­al tax­pay­ers. But for many cor­por­a­tions and oth­er busi­ness groups, there are hopes — even ex­pect­a­tions — of a cut in the cor­por­ate tax rate from 35 per­cent to as low as 25 per­cent. There is also a push for oth­er moves, such as the re­pat­ri­ation of some off­shore cor­por­ate profits. At the same time, busi­nesses are eager to pre­vent a wide ar­ray of oth­er things from hap­pen­ing, such as the clos­ing of some ex­ist­ing loop­holes.

The dev­il of any re­form is in the de­tails of what ex­actly will be tar­geted. Drut­man’s re­search has found that thou­sands of lob­by­ists are work­ing to make sure roughly 2,000 cli­ent or­gan­iz­a­tions wind up happy, and some of these ef­forts are em­ploy­ing high-pro­file former law­makers.

But gauging the depth of these lob­by­ing ef­forts from the out­side is dif­fi­cult. Rep. Bill Pascrell, D-N.J., a Ways and Means mem­ber, says he’s de­tec­ted “no great change … no spe­cial gnash­ing of teeth” in the in­tens­ity of lob­by­ing on tax is­sues this year.

But he says that’s be­cause this lob­by­ing sec­tor is al­ways busy and alert. That’s par­tic­u­larly been the case in an era of el­ev­enth-hour fisc­al-cliff bills and last-second budget man­euvers.

Pascrell did say there seems to have been more dir­ect in­volve­ment from lob­by­ists and stake­hold­ers this time around through par­ti­cip­a­tion in the 11 sep­ar­ate tax-re­form work­ing groups the com­mit­tee has used to re­search is­sues and get feed­back.

The Cen­ter for Re­spons­ive Polit­ics lists the con­tri­bu­tions to Ways and Means mem­bers by polit­ic­al ac­tion com­mit­tees and in­di­vidu­al donors. Based on fil­ings with the Fed­er­al Elec­tion Com­mis­sion dat­ing from Janu­ary through Aug. 19 of this year, the site shows that the fin­ance/in­sur­ance/and real es­tate sec­tors have been lead­ing the way—giv­ing about $3.8 mil­lion al­to­geth­er to com­mit­tee mem­bers. These groups are fol­lowed by the health sec­tor, mis­cel­laneous busi­ness in­terests, and or­gan­iz­a­tions tied to en­ergy and nat­ur­al re­sources.

And in the last ses­sion, only two of the top 25 sec­tors with the most tax-re­lated lob­by­ing activ­ity over 2011 and 2012 were not in some way tied to cor­por­a­tions look­ing for their own tar­geted be­ne­fits, ac­cord­ing to Drut­man’s re­search for the Sun­light Found­a­tion.

But law­makers and lob­by­ists note there are oth­er as­pects to lob­by­ing that might not ne­ces­sar­ily show up in fil­ings. Those range from un­der­scor­ing the con­cerns of home-dis­trict busi­nesses that might be im­pacted by tax de­cisions in Wash­ing­ton, to the im­pact for law­makers on per­son­al ties that can im­pact fu­ture job pro­spects in the re­volving-door cul­ture of Wash­ing­ton.

The lob­by­ing on tax re­form con­tin­ues des­pite a grow­ing skep­ti­cism that not much sig­ni­fic­ant re­form will ac­tu­ally take place this year.

Law­makers and lob­by­ists alike say that next week’s kick­off of a budget con­fer­ence com­mit­tee, to be co­chaired by House and Sen­ate Budget Com­mit­tee chairs Paul Ry­an and Patty Mur­ray, all but en­sures that Camp must now wait for a sort of “road map” from the con­fer­ence com­mit­tee on what might be pur­sued with the Sen­ate, per­haps un­der the bi­par­tis­an cov­er of re­con­cili­ation.

“At this junc­ture, it’s more about put­ting every eye and ear on the ground … to be fo­cused on in­form­a­tion gath­er­ing, and to be ready,” said Steve Pruitt, a former House Demo­crat­ic Budget Com­mit­tee Staff Dir­ect­or who is now a man­aging part­ner at Watts Part­ners, one of the cor­por­ate and gov­ern­ment af­fairs firms that has grabbed a share of the Wal-Mart lob­by­ing budget in 2013.

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