Lobbyists Bash Tax Overhaul They Once Supported

Just two days after he proposed a sweeping overhaul of the nation’s tax code, Representative Dave Camp, Republican of Michigan and chairman of the House Ways and Means Committee, traveled to Park City, Utah, for a fund-raiser attended by lobbyists from some of the nation’s largest corporations, including MetLife, Koch Industries, Bank of America, the Altria Group, Pfizer, HomeDepot, PricewaterhouseCoopers and AT&T.

The event was intended to honor Mr. Camp, but the gathering ended up serving a decidedly different purpose: the unofficial kickoff of a push to make sure that Mr. Camp’s tax plan dies, a campaign that is highly likely to succeed, particularly now that Mr. Camp announced this week he will not seek re-election this year. This twist reflects not only a pivot by lobbyists who had spent months cheering Mr. Camp’s three-year effort to draft this giant package – since its stated purpose was to lower corporate tax rates and simplify the tax code – but also how lobbying in Washington is often about stopping action and preserving the status quo.

Conceptually, rewriting the tax code has bipartisan support in Congress, and Mr. Camp’s proposal, released on Feb. 26, represents the most substantial effort to remake the tax code since 1986, and the 979-page tax plan would cut the overall corporate tax rate by creating a new bank tax and a surtax on the very wealthy, among many other changes.

The plan would impose a tax costing $86 billion over 10 years on nine large lending institutions — JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, Morgan Stanley, GE Capital, the American International Group and Prudential. Private equity and hedge fund managers would face a big hit because income gleaned from their clients’ investment gains would be taxed at income tax rates, not the much lower capital gains rate. Insurance companies also would take a hit, as would advertisers, since company advertising would no longer be considered a tax-deductible business expense. The small-business lobby was also incensed over a 35 percent tax rate on most income over $400,000 ($450,000 per couple) since most small businesses pay taxes under the individual income tax system, and the corporate tax rate tops out at 25 percent under the Camp plan.

Even though its chances of passing are remote, what the corporations and lobbyists perhaps most fear now is that some of the individual revenue-raisers in Mr. Camp’s plan could actually be adopted independent of a larger bill.

Jeffrey H. Birnbaum, president of BGR Public Relations and a former journalist who wrote, with Alan S. Murray, “Showdown at Gucci Gulch,” the seminal book on the Tax Reform Act of 1986, has helped assemble the Coalition for Fair Effective Tax Rates, uniting the small-business lobby — the National Federation of Independent Business — with the retail lobby, the Retail Industry Leaders Association.

“The history of tax reform is that it takes a long time to gestate,” Mr. Birnbaum said. “We understand there’s not likely to be legislation this year, but that gives us the opportunity to educate lawmakers.”