As Mnuchin Discusses Tax Reform, Business Groups Lobby To Shape Tax Policy

Treasury Secretary Steven Mnuchin’s appearance at a D.C. event “about how we can get Congress to unrig the economy by passing a plan for pro-growth tax reform” seemed to signal a White House pivot from its failure on health care reform to the next item on the agenda: taxes. And, as with health care, those with big stakes in the outcomes of potential policy changes have put plenty of money behind advancing their interests. Several have declared full-fledged campaigns to do so.

The Monday event was hosted by Americans for Prosperity, the conservative political organization headed by billionaires Charles and David Koch, and Freedom Partners Chamber of Commerce, a free-market-oriented advocacy group made up of paying corporate members.

Read: Secretive Group Backs GOP Health Care Bill, Corporate Tax Cuts

Although the latter group is a 501(c)(6) and therefore does not have to disclose its donors, its eponymous PAC received $6 million from Charles Koch during the 2016 election cycle, according to OpenSecrets. Its former director and president, Marc Short, was appointed as Donald Trump’s director of legislative affairs weeks before the president took office. Short was also present at the Monday meeting at the Newseum, where he reportedly announced plans for a tax reform bill to move through both houses of Congress by November.

In a May paper on tax reform, Freedom Partners Chamber of Commerce and Americans for Prosperity jointly advocated for “lower rates, fewer brackets and the elimination of special loopholes,” as well as a “low-rate tax system… causing as little disruption to the economy as possible.” In mid-May, Americans for Prosperity launched its “massive campaign to support tax reform,” complete with six-figure spending on social media ads intended to pressure lawmakers to adopt the group’s policy objectives.

In the waning days of the 2016 election cycle, according to Federal Election Commission filings, Freedom Partners Chamber of Commerce spent several hundred thousand dollars in support of Congressional candidates, including Sens. Pat Toomey (R-PA.) and Richard Bur (R-NC). Both senators are members of the Senate Finance Committee, which oversees taxation, and were up for reelection last year. That spending, however, was dwarfed by the more than $25 million Freedom Partners’ super PAC spent — predominantly on attack ads targeting candidates who favor higher taxes for capital gains, corporations and high-income earners, the estate tax or both — in the same cycle. Meanwhile, Americans for Prosperity spent over $8 million over the same period, mainly on ads attacking those same candidates.

Political groups aside, the private sector has spent plenty of money advancing its own tax preferences. Business Roundtable, a group advocating for those in the C-suite, announced its own tax reform campaign on Friday. Eleven days earlier, Business Roundtable posted a letter to Senate Finance Committee Chairman Orrin Hatch, urging him to push forward a system “that permanently removes the penalty for returning foreign earnings to the United States” and includes “a corporate tax rate set at an internationally competitive level.”

Without mentioning a specific number for its intended corporate income tax rate, the group pointed to a European Commission study pegging the effective marginal U.S. corporate rate, combining taxes at the federal and subnational level, at 34.3 percent — about 4 percent below the statutory rate when federal and average state corporate taxes are combined, but more than twice the average of most European countries, as well as Canada and Japan. (An April 2016 White House study, by contrast, estimated that combined effective rate to be about 18 percent. Two reports on effective federal and state corporate tax rates by the Institute on Taxation and Economic Policy found that, for dozens of profitable Fortune 500 companies, it has, on occasion, been zero.) Trump's White House has recently backed off its 15-percent corporate-tax-rate goal, with a plan to implement something closer to 20 percent.

Many corporate members of Business Roundtable, whose letter advocated for more “competitive” rates, have collectively spent millions on lobbying involving “tax reform” in the second quarter of 2017 alone, federal lobbying files show. Those members included investment bank JPMorgan Chase, which spent a total of $840,000 on lobbying efforts related in part to tax reform; 3M company, with $760,000; American International Group, better known as AIG, with $220,000; Bank of America, with $440,000; the private equity firm Blackstone Group, with $160,000; Wells Fargo, with $800,000, and the Rupert Murdoch-and-sons-led 21st Century Fox spent $105,000 in total,

Read: US Walks Out On Accord To Combat Global Corporate Tax Evasion

The biggest spender on tax reform-related lobbying was Waste Management Inc., which reported just a dollar short of $1 billion in lobbying expenditures involving, in part, “corporate tax reform” during the second quarter. The firm’s former CEO, David Steiner, who left the company in November, once referred to Waste Management as “the poster child for tax reform” after the company repatriated earnings from the sale of its operations in Puerto Rico back to the U.S., forcing it to pay a higher rate.

“We need a more logical way to be able to bring earnings back to the United States where they can be invested in the United States without a huge tax bill,” he told Bloomberg last year.

In terms of tax reform lobbying expenses, Waste Management was followed, albeit distantly, by the U.S. Chamber of Commerce, a business advocacy group that doesn’t disclose its membership. The Chamber lobbied on numerous tax policies, according to its federal filing, spending $11.68 million in total on those efforts during the second quarter.

Along with “lower tax rates for businesses and individuals alike,” the organization, like Waste Management’s former CEO, opposes the current high rates on repatriated overseas profits. In a July 20 letter to Congress, the Chamber’s president and CEO, Thomas Donohue, announced on the organization’s very own campaign to influence tax legislation, and ended it on a threatening note.

“Members of Congress be warned,” Donohue wrote. “Failure is not an option.”