Life was good for the tuxedoed and gowned tax lobbyists lined up last month along Washington’s waterfront to get into “Tax Prom,” a wonky event even by the standards of a city peopled by policy nerds.
After a Republican sweep to power, Congress was starting to negotiate a sweeping tax bill, a boon for an industry that thrives when lawmakers rework the tax code. The corporate tax rate could drop. Tax breaks for research and development could return. A deduction for the owners of many businesses would likely remain in place.
So there was a sense of optimism at this year’s celebration of the capital’s tax professionals. Hosted annually by the Tax Foundation, a think tank that generally favors lower taxes, and sponsored by major corporations, Tax Prom is Washington network par excellence.
Congressional staff and lobbyists chatted at the open bar. An advocacy group seeking higher taxes ran advertisements criticizing the event. Kim Reynolds, the Republican governor of Iowa who has repeatedly cut taxes, received the event’s annual award. Attendees availed themselves of the opportunity to make jokes about depreciation schedules — and maybe actually get a laugh.
But even with the conditions ripe for cutting taxes next year, the village of consultants, lawyers and former congressional aides that lobby Capitol Hill were not ready to let its guard down.
Tax cuts cost money, and some companies are on alert for Republicans that would pare back corporate tax breaks to save revenue. Various industries and companies have an array of sometimes conflicting demands of Congress, turning next year’s tax bill into another arena for corporate competition. Then there are those who don’t want to miss out an opportunity to worm an advantageous tax change into law.
“On the corporate side, everyone is optimistic on the surface, but what are we talking about underneath?” said Ken Spain, a Republican consultant advising businesses on tax legislation. “Some are wondering, how is this going to get paid for and where are they going to look for revenue.”
The most expensive tax measure Republicans are considering is a continuation of the tax cuts they passed in 2017. The law slashed the corporate tax rate to 21 percent from 35 percent and cut taxes for many American households, particularly rich ones.
Preserving portions of that law, which is set to expire, would cost roughly $4 trillion over 10 years, according to the Congressional Budget Office. The deadline is forcing lawmakers, fearful of allowing higher taxes on many Americans and businesses to snap back into place in 2026, to pass a tax bill next year.
To try to cover at least some of the cost, Republicans are looking at ending tax breaks for clean-energy companies included in President Biden’s Inflation Reduction Act. Some oil and gas executives have pushed President-elect Donald J. Trump to effectively raise taxes on Americans that buy electric vehicles, while Elon Musk, a close partner to Mr. Trump, has said ending the tax credit for electric vehicle purchases would help Tesla by setting back other carmakers.
Those rivals, though, are making their own case. The Alliance for Automotive Innovation, an industry group that includes General Motors and Ford, has lobbied to protect clean-energy incentives, arguing to Republicans that they would help the United States compete with China.
Companies and interest groups are tightly guarding other sources of money for Republicans. As a way to reduce the cost of the original 2017 tax law, Republicans limited companies’ ability to write off research costs, a change that lawmakers and corporations now want to reverse. The 2017 law also set a $10,000 cap on the state and local tax deduction, a ceiling that realtors and officials from high-tax areas like New Jersey hope to lift.
Indeed, a broad swath of corporate America has already spent months lobbying Congress on the expiring tax provisions. Airbnb, Anheuser-Busch, FedEx, Google, Eli Lilly and Exxon Mobil have all dispatched tax lobbyists to Capitol Hill in recent months, according to lobbying disclosures, and firms are also hiring up more former Hill aides to persuade and collect information from their old colleagues.
“Everybody in town is getting ready to be part of the fight,” said Ivan Adler, a lobbyist headhunter, calling the coming battle “taxapalooza.”
Some lobbying efforts are more sophisticated than others. Mr. Trump has said he adopted his pledge not to tax tips after a waitress at his Las Vegas hotel complained about paying taxes on her tips. (During a recent visit to Washington, Uber’s chief executive, Dara Khosrowshahi, pushed lawmakers to make sure such a provision covers tips for Uber drivers, according to a company spokesman.)
When Solomon Yue, a Republican activist, first heard Mr. Trump proposing new tax cut ideas during the campaign, he saw an opportunity. Mr. Yue had spent years unsuccessfully pushing to change how Americans overseas are taxed, an idea that had been part of the Republican Party’s platform before Mr. Trump and his allies overhauled it over the summer.
Earlier this year, Mr. Yue reached out to political and communications staff on the Trump campaign, who brought the idea to Mr. Trump directly. Mr. Yue said he received “a green light with a very specific verbiage I can use. It says Donald Trump will end the double taxation of overseas Americans.”
The National Federation of Independent Business, a trade group, has been running advertisements in states and the District of Columbia. The group is focused on a continuing a tax deduction available to the owners of “pass-through” businesses. These businesses, which constitute a vast majority of corporations in the United States, are not directly taxed; instead they pass on their earnings to owners, who then pay individual income taxes on them.
Republicans broadly support the deduction for these businesses, meaning Congress is likely to extend it as part of the tax bill next year. Still, Jeff Brabant, the business federation’s vice president of federal government relations, is not at ease.
“Among Republicans, I don’t think we’re going to see significant concerns,” he said. “But you never know in life. Just because you’re well positioned doesn’t mean you’re out of the woods. You never know in this town.”
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