Business help is on the way for House Republicans’ controversial plan to adjust corporate taxes at the border.
Before this week, House leadership had faced strident criticism from several major industries that stand to lose when the cost of imported goods is no longer deductible. The onslaught included a coordinated effort from retailers and high-profile opposition from Koch Industries, a business usually allied with Republicans that owns refineries dependent on imported oil.
Uniform business opposition would doom tax reform. House Ways and Means Committee Chairman Kevin Brady, tasked with writing the legislation, acknowledged the need for business support this week in a speech at the Chamber of Commerce. “Unless CEOs of businesses large and small are engaging, speaking out, studying this proposal early, insisting Congress act now in a bold way, this will be tough to get done,” Brady told the business group.
Days later, supportive companies and executives are coming forward.
On Thursday, a coalition of 37 major companies endorsed the Republican tax blueprint, including Bank of America, General Electric, Coca-Cola and other heavy hitters.
In a statement, the coalition, which calls itself the Alliance for Competitive Taxation, said, “important details that still must be worked out.” But it endorsed the broad contours of the plan, which include the border-adjustment.
The plan offers a lot to encourage businesses, such as a 20 percent tax rate, down from 35 percent today, and the policy of allowing companies to immediately write off all new investments.
A closer look at the supportive companies, however, also reveals that some of them may win with the border adjustment. Several are among the biggest exporters in the U.S. Under the GOP destination-based tax plan, those companies would be allowed to deduct overseas sales from their taxable income. That could be a major boon, for instance, for Coca-Cola, which sells most of its products outside of North America, bringing in nearly $13 billion just in the first nine months of 2016.
Eli Lilly, a pharmaceutical giant headquartered in Indianapolis, is a member of the coalition. In a statement to the Washington Examiner, Eli Lilly Vice President of Finance and Corporate Tax David Lewis, explained the company’s membership in the coalition: The company “believes friendlier taxation of foreign earnings, a lower U.S. corporate tax rate and U.S. innovation incentives — similar to the rest of the world — will encourage significant investment in the United States creating economic growth and good jobs for all Americans. The House Republican blueprint’s destination-based cash flow tax with border adjustability achieves these priorities and puts America’s global companies on a level playing field with competitors around the world; therefore, Lilly supports this framework.”
Speaking Thursday at an event in Washington, Janet Boyd, director of government relations for the Dow Chemical Co., said her company also backed the reform. In comparison to past tax reform attempts, she said, the GOP plan has a “simpler and perhaps more practical” method of fixing the current problems with taxes on international profits.
More help is on the way. A new coalition of companies that explicitly back the border-adjustment, not just the framework as a whole, will announce its formation next week. The group doesn’t yet have a name or a list of members, but it is expected to include large and small companies.
In addition to corporate coalitions, some influential groups, which also receive corporate backing, are giving the plan their support. This week, for instance, the plan received the endorsement of Grover Norquist, the president of Americans for Tax Reform and a prominent conservative activist.
While some conservative outside groups, such as the Koch-backed Americans for Prosperity, have opposed the plan, others are rallying behind it — or at least staying out of the way.
U.S. Chamber of Commerce President Thomas Donohue, for instance, earlier in February told executives to “to look beyond the immediate impacts of various proposals and consider the long-term benefits” of tax reform.
Speaking on a Facebook broadcast for the libertarian group FreedomWorks Thursday, Stephen Moore, an economic adviser to the Trump campaign as well as FreedomWorks, said the border adjustment would be “pro-jobs.”
Moore called on the group’s activists to pressure Congress to pass the GOP plan. “Get this tax cut done now,” he said. “There is no room for failure. We will not tolerate failure. We waited 30 years for this moment — don’t squander it.”
