On K Street, Quiet Before Tax Brawl Begins

Lobbyists await the text of the GOP plan

When House Republicans release the text of their tax overhaul Nov. 1, it is expected to ripple through the lobbying class. (Bill Clark/CQ Roll Call file photo)

The silence and apparent harmony on K Street won’t last much longer. Give it about 48 hours.

That’s when House Republicans say they will unveil the text of their tax overhaul, and the nation’s business community will assess what the details mean for their own bottom lines, spurring a boom among the lobbying class.

Even though corporate America and its biggest lobbying groups have long clamored for a complete update to tax laws, divisions among them are inevitable. In short, it’s not a matter of if, but when. And opponents of a tax overhaul, including Democrats, will seek to exploit those divides to derail the package.

“We think the greatest threat to tax reform are all the special interest tax deductions and loopholes,” said Tim Phillips, president of Americans for Prosperity, a grass-roots and advocacy group funded by Charles and David Koch. “K Street is mobilizing to defend these special interests.”

Phillips said he’s encouraged by recent congressional meetings, including one with Ways and Means Chairman Kevin Brady. Phillips said the Texas Republican is committed to ending special interest carve-outs in exchange for reducing the corporate tax rate from 35 percent to 20 percent — something the nation’s business interests are, in theory, in favor of.

But the business community already fought a brutal campaign against a proposed border adjustment tax — a signature idea backed by Speaker Paul D. Ryan and Brady that would have helped raise money to pay for the overhaul. Retailers and conservative groups, including those in the conservative Koch brothers network, were willing to risk the overhaul effort to fight the BAT. They successfully forced House, Senate and White House leaders to scrap the idea in July. 

Now conservative groups and business lobbies say they are working to smooth over the coming divides. The stakes, they say, are unbelievably high.

It’s not likely to be so simple.

“The business community is not monolithic,” said Jade West, a Republican and senior vice president of government relations for the National Association of Wholesaler-Distributors. “At the moment, everybody is getting along very nicely, and we will until we see the specifics.”

Those details may quickly unravel the comity on K Street.

“There become winners and losers as to how people view this tax package,” said former Rep. Thomas M. Reynolds, who served on Ways and Means and is now with Holland & Knight. “There will be a scramble going on there. Strategies will be formed to figure out what’s in the best interest of the client.”

The National Association of Realtors has raised its concerns that the proposed doubling of the standard deduction would render the mortgage interest deduction mostly useless, a potential threat to its industry. Meanwhile, lobbyists for state and local governments have blasted a possible proposal to eliminate federal deductions for taxes paid to state and local governments.

Additionally, smaller businesses are worried about whether they’ll benefit from a decrease in tax rates.

Still, signs of cooperation and collaboration exist.

Phillips, for example, said he has been meeting with business organizations such as the National Association of Manufacturers, the U.S. Chamber of Commerce and the American Action Network, which aligns with House Republican leadership.

Chamber president Thomas Donohue offered a warning for his colleagues, as well as those on Capitol Hill: “I urge the business community and members of Congress to refrain from taking shots at individual provisions.”

The detente is unlikely to last.

“My job isn’t to sell the House or Senate proposal to my members,” said West of the wholesalers group. “My job is to present the views of my members to the House and Senate.”

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