Cassidy Tiptoes Into Tax Lobbying

Posted June 7, 2005 at 6:31pm

Appropriations lobbying has always been one of the most reliable sectors for lobbyists because it deals in cold, hard cash and often steers clear of nasty partisan bickering.

But it’s also one of K Street’s most competitive areas — and now, with federal budgets strapped, it’s an area that may become increasingly problematic for lobbyists and clients.

With that in mind, the city’s oldest and biggest appropriations firm, Cassidy & Associates, has decided it wants to get a piece of the tax-writing policy action.

Cassidy, which has already been in diversification mode for the past few years, believes that such a practice will help clients find alternative funding sources at a time when appropriations isn’t a viable option.

“We’re trying to diversify our firm by reducing the amount of appropriations work,” said Cassidy Chief Operating Officer Gregg Hartley, a former chief of staff for House Majority Whip Roy Blunt (R-Mo.). Hartley also noted that the firm has expanded its communications and corporate practices.

“One of the things we’ve never done is a tax practice,” he said, adding that Cassidy & Associates is looking for “innovative” ways to find money for its clients through the tax code.

So far, Cassidy’s only hire with a background in tax policy is Dawn Levy, a former tax counsel to Sen. Max Baucus (D-Mont.), who is the ranking member of the Finance Committee. Hartley said the firm is hoping to hire more tax professionals if the right opportunity presents itself.

“Appropriations won’t go away,” Levy said. But when it comes to finding money for clients’ projects such as roads, she added, the Internal Revenue Code can serve as an alternative vehicle.

“We often try to set policy through the code,” she said. “The tax code will be the future of how we build our infrastructure.”

While clients following the tax-writing approach wouldn’t receive direct earmarks in federal spending bills, Levy and Hartley said that clients could end up with federal bonds and tax credits instead. “It’s about using longtime financing instead of cash on the barrel,” Hartley said.

Pete Ruane, president and chief executive of the American Road and Transportation Builders Association, said his group has worked with Cassidy & Associates for the past six months on legislation reauthorizing the federal highway and transit programs.

“We’ve engaged Cassidy & Associates to help us come up with ideas and work with Members of Congress and staff to find new sources of revenue to pay for that legislation,” Ruane said. Among other things, he added, “we’ve been looking at reforming the way some of the excise taxes are going into the highway trust fund. There are other tax code issues out there that can be changed that would benefit the highway trust fund, by the way they treat the various tax incentives.”

While the highway and transit bill is his group’s priority, Ruane said revenue shortages also apply to the aviation trust fund and other transportation matters.

Of course, the tax lobbying sector already has well-entrenched firms bursting with tax experts and lawyers.

Lindsay Hooper of Capitol Tax Partners has worked on tax policy matters for years and founded the firm in 2001.

“As difficult as the appropriations process is, the tax-writing process is no easier,” he said. “And the resources are no greater.”

Unlike appropriations bills — in which Members try to assure a pot of money for a specific project — Members on tax-writing panels often eschew such “rifle shot” approaches that affect a very limited number of taxpayers.

“If a provision is considered a rifle shot, it’s almost like tattooing it as bad,” Hooper said. “It’s extremely difficult to move a provision that’s been marked as a rifle shot. It’s sort of the opposite of the appropriations world.”

Kenneth Kies, managing director of Clark Consulting’s Federal Policy Group, said that one does not enter the tax realm lightly. In order to lobby effectively on tax matters, he said, you have to know the code.

“The Internal Revenue Code is two books, each about four inches wide. That’s thousands of pages,” he said. “Then there are the regulations that interpret it, those are six volumes. … I think it’s fair to say the Internal Revenue Code is the most complicated statute.”

“Tax is a practice area in which a lobbying firm wants to be cautious about entering,” Hartley said. “There are a number of very strong practitioners already including Ken Kies … and Aubrey Rothrock at Patton Boggs, both of whom we share existing corporate clients” with.

Kies said that the procedural aspects of tax bills and spending measures are also different. Tax bills, for example, are rarely amended on the House floor.

Levy said that during her experience working for Baucus on the Finance Committee, she learned from “tax purists” and picked up “just enough [knowledge] to be dangerous.”

“We’re being innovative,” Levy said. “D.C. is usually reactive. As a staffer I loved it when people come with innovative proposals. [Staffers] appreciate creativity and innovation.”