Tax Measure Fuels Business Bonanza

Posted October 6, 2009 at 6:12pm

Even as health care continues to dominate Capitol Hill, lobbyists are ramping up their efforts behind the scenes to add legislative sweeteners to a tax bill Congress is expected to take up before the end of the year.

Lobbyists say they believe Congress will be forced to act because the estate tax and a popular tax credit for companies doing research and development are set to expire at the end of the year.

“The driver this year is the death tax,— said Jade West, of the National Association of Wholesaler-Distributors. “That is what is keeping us up at night.—

West supports the complete elimination of the estate tax. Under the current structure, the estate tax would be done away with in 2010, but then in 2011, the law would impose taxes at pre-2001 levels that would tax estates worth more than $1 million.

With any tax bill comes opportunities for business, lobbyists say.

“Anybody who wants a provision to get done this year, this is their one opportunity,— said Alex Vogel, a lobbyist at Mehlman Vogel Castagnetti.

For those pushing discrete tax provisions, their hope is that lawmakers will open the package to include economically stimulating provisions.

Senate Democratic leadership has said in meetings with K Streeters that it wants the bill to include a multipronged approach that would include some stimulus-related extenders, according to lobbyists working the issue.

Likely provisions to be included in a stimulus section of the tax bill would be an extension of unemployment benefits, the tax credit for the unemployed to help offset their health insurance premiums and the extension of the first-time homebuyer tax credit that expires in November.

“They want to do a second stimulus bill but not call it a stimulus bill,— said Ken Kies, a tax lobbyist at Federal Policy Group.

Although Congress typically allows the extenders to expire before taking them up the following spring, the struggling economy is pushing Congress to act faster.

“If you don’t extend the other extenders, it’s a tax increase,— Kies said. “The last thing this economy needs is a tax increase.—

Several business groups are hoping to take advantage of the tax bill to enact a provision that would allow businesses to write off billions of dollars in losses.

The legislation would extend to five years the period that companies can use to offset revenue losses. Under current law, companies can usually carry back tax losses for only two years.

Backers of the bill have been lobbying hard since the net operating loss language that was included in the House and Senate stimulus packages earlier this year was stripped from the final package.

“We’ve really done a full-court press,— said Monica McGuire, chairwoman of the Net Operating Loss Coalition.

The group, which is composed of a cross section of industries from retail, manufacturing, construction, newspapers and restaurants, has done more than 100 Capitol Hill meetings this year, including two CEO fly-ins and another fly-in of tax executives.

McGuire says extending the NOL has a proven track record. Congress passed similar legislation during the 1980s recession and more recently after the Sept. 11, 2001, terrorist attacks to help struggling businesses.

Senate Finance Chairman Max Baucus (D-Mont.) and Sen. Olympia Snowe (R-Maine) have gotten 42 co-sponsors for the Senate bill. The companion bill in the House has 135 co-sponsors.

Large homebuilders have been very active lobbying the issue because it would help them write off billions of dollars in losses. Several large builders, frustrated that the NOL was stripped from the stimulus bill, branched out this spring and formed their own lobbying entity called the Homes for America Alliance.

The National Association of Home Builders has also been actively engaged on the issue, but President Jerry Howard says he is less confident that it will be added to the final bill.

“I’m more optimistic about the tax credit than I am about NOLs,— Howard said. “The tax credit has been very favorably received from the far left to the far right.—

Howard also noted that it’s always easier to get an extension than to pass a new law.

Still, the NAHB isn’t giving up.

The trade group targeted Members over the August recess, setting up district meetings with more than 150 lawmakers. The NAHB would like the tax credit expanded to include purchases of all principal homes.

The NAHB has also been partnering with the National Association of Mortgage Brokers and the National Association of Realtors to push the homebuyer tax credit.

Howard says he expects the association will do a national ad buy to push for the extension before the end of the year.