K Street is divided on President Barack Obama's plan to reform corporate taxes, with some industries wanting to protect their existing tax breaks and others that figure they would be better off with a lower overall rate.
Lobbyists have been waiting for a president to greenlight corporate tax reform for years, but now that one has, the business community is hardly unified.
Lobbyists were quick to acknowledge that the proposal the Obama administration unveiled today is largely a political document designed to help Democrats prove their commitment to fixing the economy in advance of the 2012 elections. But K Street is divided on what the move actually means for the business community and the future of reform.
Already the debate downtown is shaping up as a brawl between industries that want to protect their existing tax breaks and the ones that figure they would be better off with a lower overall rate.
The American Petroleum Institute scheduled a conference call for Thursday with its president and CEO, Jack Gerard, and wasted no time in attacking President Barack Obama’s proposal. The group, which benefits from what some call tax law loopholes, will discuss “why punitive taxes on the industry will destroy job creation and weaken America’s energy security” on the call.
Other groups, such as the Business Roundtable and the Information Technology Industry Council, both of which support lowering the corporate tax rate, criticized the administration’s plan for increasing the burden on companies with global operations, including a minimum tax on foreign income.
Large technology firms have been advocating for a territorial system that would not tax foreign profits at all.
“We feel like we’re being targeted,” one Democratic technology industry lobbyist said. “This makes it more difficult for our friends on the Hill, particularly on the Democratic side.”
Still, don’t expect tech industry executives to bombard the Hill with words of warning.
“I don’t think we need to be particularly aggressive,” the Democratic lobbyist added. “This conveniently fits into the campaign narrative that they are developing. Maybe outside of a campaign setting they will be more open-minded.”
For much of K Street, the stakes do not seem much higher than before.
“I would not expect to see much of an uptick in activity,” said Kenneth Kies, the managing director of the Federal Policy Group. “One, there are no surprises; two, no one thinks it’s going anywhere; and three, there is already a fairly high level of activity on tax reform.”
Some lobbyists groused today that the proposal was low on substance and high on politics. The 20-page document contained few surprises. Most of the ideas had been floated in the administration’s previous budget proposals.