President Donald Trump insists “the rich will not be gaining at all” with his administration’s new tax reform bill, introduced on Wednesday. But the measures in the plan are aimed at benefiting wealthy business owners and the nation’s powerful corporations that have spent, in some cases, millions of dollars lobbying for its own interests and filling the campaign coffers of the very people who crafted the bill.
The centerpiece of the plan is a series of tax cuts for corporations that will likely mean less funding for the government to do its job and more money in the hands of the wealthy corporate interests who bankrolled their various campaigns.
Though a recent ABC News/Washington Post poll found that 65 percent of Americans believe large corporations pay too little in federal taxes, the main provisions of this bill will cut taxes on those companies even further. The bill is a virtual wish-list for the U.S. Chamber of Commerce and an array of the largest lobbying forces in Washington.
ThinkProgress found that 50 of the entities that indicated that they had lobbied on tax reform in the second quarter of 2017 alone accounted for nearly $151 million in lobbying expenditures.
Additionally, by pouring thousands of dollars from corporate PACs into the campaigns of the Congressional Republican leaders with the most influence on what made it into the bill, these companies and interest groups ensured access, influence, and/or the presence of likeminded allies in positions of power. And because some had longstanding ties with key Trump officials, they may have had even more influence than usual.
Here are some of the main provisions of the reform bill and the interests that successfully pushed to get them included.
Lowering the corporate tax rate
Though many corporations pay far less than the 35 percent federal tax rate on the books, nearly every corporate interest that weighed in on tax reform wanted the rate lowered. Those corporations got their wish: It was announced on Wednesday that the rate would be lowered to 20 percent, and the president reiterated he would not negotiate on the 20 percent rate.
Leading the charge for a rate cut was a coalition of businesses calling itself the RATE Coalition.
Its members, each of whom believes that a lower rate “would better allow U.S. businesses to compete in today’s globalized marketplace,” include Aetna Inc., AT&T, Altria Client Services, Association of American Railroads, Boeing, Brown-Forman, Capital One, Cox Enterprises, CVS Caremark, Edison Electric Institute, FedEx, Ford, General Dynamics, Home Depot, Intel, Kimberly-Clark, Liberty Media, Lockheed Martin, Macy’s, National Retail Federation, Nike, Northrop Grumman, Raytheon, Reynolds American, S&P Global, Southern Company, Synchrony Financial, T-Mobile, UPS, Verizon, Viacom, and Walmart.
In just the second quarter of 2017, members of the RATE coalition spent more than $48 million on total lobbying.
And many of those companies, through their PACs, have given many of the leading Republican tax reform policy writers large political donations over the years.
Along with the GOP leadership and Trump administration, a quartet of key legislators oversee tax policy. Orrin Hatch (R-UT) chairs the Senate Finance Committee, which has jurisdiction over taxation. Sen. Rob Portman (R-OH) chairs its subcommittee on taxation and IRS oversight. Their House counterparts are House Ways & Means Committee Chairman Kevin Brady (R-TX) and tax policy subcommittee chairman Peter Roskam (R-IL). Thus, this legislation falls squarely in the purview of their fiefdoms (and sub-fiefdoms).
AT&T, for instance, has given Brady at least $70,500 throughout his career, Hatch $57,999, and Roskam $60,500. Since 2009, Portman has received at least $19,500 from the telecommunications giant’s PAC as well.
Boeing’s PAC donated large sums to the campaigns of policy writers, since 2002 donating at least $34,500 to Roskam’s campaign, $31,000 to Hatch’s, $20,000 to Portman’s, and $27,500 to Brady’s.
Same with Aetna’s, which through its PAC has given at least $24,000 since 2005 to Hatch’s campaign, $20,000 to Portman’s, $17,500 to Brady’s, and $5,000 to Roskam’s. And General Dynamics’ PAC has donated at least $67,000 to Roskam’s campaign since 2005, $14,000 to Portman’s, $8,625 to Hatch’s, and $1,000 to Brady’s.
Other major lobbying forces like United Technologies (more than $2.2 million in lobbying in that period), the National Association of Manufacturers (more than $1.7 million), and the U.S. Chamber of Commerce (more than $11.6 million) also explicitly pushed for rate cuts. Since 2002, United Technologies’ PAC has donated $30,000 to Brady’s campaign, $18,000 to Roskam’s, $15,000 to Portman’s, and $13,000 to Hatch’s.
The Chamber spent about $30 million in the 2016 elections to elect Republicans, including $10,000 in PAC contributions to Rob Portman, and another $4.6 million in “independent expenditures” to help him defeat his Democratic opponent. Portman chairs the Senate Finance Committee’s taxation subcommittee. The non-profit consumer advocacy group Public Citizen observed that the tax-exempt pro-business group “has become an arm for the Republican Party.” As the second largest outside spending group, its largesse was a huge factor in the Republicans maintaining their narrow majority in the U.S. Senate. And a July “open letter” from the Chamber’s president and CEO to all members of Congress and congressional candidates made clear that the group’s 2018 campaign spending would be in support of those who back its “free enterprise” agenda on issues like tax reform.
A tax cut for non-incorporated businesses
Of course, not all businesses are corporations — nor are all of the Chamber’s members and funders. So the group’s massive lobbying campaign focused not just on “c corps,” subject to the 35 percent federal rate, but also on pass-through businesses like LLCs, “s-corps,” and partnerships, which are subject to different tax rates based on what individuals pay. They too, the Chamber argued, should receive large tax cuts for their revenues.
Among the LLCs that might be affected are the Koch brothers’ petrochemical behemoth Koch Companies Public Sector, LLC (which spent more than $2.5 million on lobbying in the second quarter of 2017), tobacco giant Altria Client Services (also more than $2.5 million), and the president’s own Trump Organization. (While The Trump Organization has not acknowledged lobbying in 16 years, Roger Stone was their lobbyist in 2000.)
Since 2005, the Koch Industries’ corporate PAC has given at least $57,500 to Roskam’s campaign committee, $33,000 to Brady’s, $28,000 to Hatch’s, and $20,000 to Portman’s. Additionally, Charles and David Koch helped spend millions of dollars in 2016 to elect Republicans through their web of dark money groups like Americans for Prosperity (which spent over $1.7 million attacking Portman’s opponent in 2016) and Freedom Partners Action Fund (which spent nearly $10 million on that race).
The Republican leadership’s proposal would lower the tax rate for many such businesses all the way from 39.6 down to 25 percent. And with the individual maximum dropping to 35 percent, every such business would see a lower rate. With these changes, pass-throughs—including Trump—would save billions in taxes.
Allowing low-rate repatriation
Another key corporate giveaway in the proposal would allow multinational corporations to bring accumulated foreign earnings back to the homeland at a low one-time rate, known as a repatriation tax. The administration has still not announced that rate but officials have reportedly indicated it will be somewhere in the 10 percent range.
The non-partisan Institute on Taxation and Economic Policy has identified at least 322 Fortune 500 companies with $2.6 trillion dollars in foreign profits that they have not yet repatriated to the United States, avoiding U.S. taxes on that money. This money is typically revenue from foreign subsidiaries and is taxed by the United States not in the year that it is earned but in the year that it is moved back to the domestic parent company.
Of those companies in the Taxation and Economic Policy report, the ten with the most unrepatriated foreign money, as of 2016, were Apple, Pfizer, Microsoft, General Electric, IBM, Johnson & Johnson, Cisco Systems, Merck, Google, and Exxon Mobil. In total, those companies held more than $1 trillion in unrepatriated funds and spent almost $21.7 million on second quarter lobbying. Apple, the Consumer Technology Association, Hewlett-Packard, the National Association of Manufacturers, and Northrop Grumman each lobbied to make sure it was included in tax reform.
Orrin Hatch has received at least $44,500 in career PAC money from Eli Lilly and Company, which had $28 billion overseas in 2016 and spent more than $2 million lobbying on tax reform in the second quarter of 2017. Hatch has also received $53,500 in PAC donations from Pfizer, which had over $197 billion overseas in 2016, $28,000 in PAC money from Microsoft, which had $124 billion overseas, and over $9,000 in PAC cash from Oracle, which had $42.6 billion overseas.
Hatch is in good company. Brady received at least $71,750 in PAC money from Chevron, a company that had over $46 billion in unrepatriated foreign profits in 2016. Roskam has received $62,500 in PAC donations from Caterpillar, a company that had $16 billion overseas and $49,000 from McDonald’s, the same fast food empire that’s served billions and billions while holding more specifically, $16 billion overseas.
Goldman Sachs — the former employer of both Gary Cohn, Trump’s chief economic advisor, and Treasury Secretary Steve Mnuchin — through its PAC has given Roskam’s campaign $42,000 and Portman’s, $10,000 throughout their careers. Since 2010, Hatch’s campaign has also received at least $20,000 from Goldman Sachs’ PAC, while Brady has received at least $17,500. The banking magnate, which was fined billions for its role in the 2008 economic collapse, had over $31 billion overseas in 2016.
Cohn, the former Goldman Sachs COO who led the company in the years following the economic recession before taking a job at Trump’s White House, helped steer the tax reform effort with Mnuchin, who rose through the company’s ranks during the 1980s to early 2000’s becoming the company’s vice president and CIO.
Should this provision become law, those companies could repatriate the money and save tens of billions on their tax bill.
Territorial system for future foreign profits
But even if all of these existing foreign profits are repatriated tomorrow, the question would remain of how to avoid such a cash buildup in the future. To discourage companies from again hoarding their foreign profits without repatriating them, the package includes a system that would not tax U.S.-based companies on profits earned abroad — making it much cheaper for U.S. companies that make profits internationally.
This change — known as a “territorial system” — was a priority for the Business Roundtable, Comcast, Eli Lilly and Company, FedEx, Hewlett-Packard, Pfizer, Qualcomm, and United Technologies, which combined to spend more than $19.2 million on second-quarter lobbying. Like much of the rest of the plan’s overview, there were few details about the setup of the system or what rules would be put in place to ensure domestic earnings do not escape taxation.
Another coalition — the Alliance for Competitive Taxation (ACT) also pushed for changes to the way foreign profits are taxed going forward. Instead of the existing system, they urged a more territorial approach that would “[modernize] our international tax system to make American businesses more competitive in the global marketplace.” Its members include 3M, Abbott, Alcoa, Bank of America, Boston Scientific, Caterpillar, Coca-Cola, Danaher, Dow Chemical, Eli Lilly and Company, E. I. du Pont de Nemours, Emerson Electric, Exxon Mobil, General Electric, General Mills, Google, Honeywell, International Business Machines, International Paper, Johnson & Johnson, Johnson Controls, JPMorgan Chase, Kellogg, Kimberly-Clark, MasterCard, McCormick & Company, Morgan Stanley, Oracle, PepsiCo, Procter & Gamble, Pfizer, Prudential Financial, State Street, S&P Global, Texas Instruments, United Technologies, UPS, Verizon Communications, and Walt Disney. Together, these companies spent over $44 million on second-quarter lobbying.
They, like many other companies lobbying to influence the bill, have also donated PAC money to the lawmakers crafting it. Since 2001, for instance, Bank of America’s PACs have donated at least $63,500 to Roskam’s campaign, $38,000 to Brady’s, and $22,500 to Hatch’s. Likewise, since 2003, General Electric’s PAC has donated at least $53,500 to Brady’s campaign, $32,000 to Roskam’s, $24,000 to Hatch’s, and $19,500 to Portman’s.
Johnson and Johnson’s PAC has donated at least $29,500 to Brady’s campaign, $26,000 to Hatch’s, $17,000 to Portman’s, and $11,500 Roskam’s, since 2003. Verizon’s PACs, since 2001, has given at least $46,000 to Roskam’s campaign, $40,500 to Brady’s, $27,000 to Hatch’s, and $15,000 to Portman’s.