Lobbying groups representing large corporations swiftly criticized a revamped reconciliation deal announced by Senate Majority Leader Charles Schumer (D-N.Y.) and Sen. Joe Manchin (D-W.Va.) on Wednesday.
They are zeroing in on the plan’s 15 percent minimum tax on corporations, which would help pay for massive investments in climate and energy security, extended health care subsidies and reduce the deficit.
Big business lobbyists are expected to make a last-minute push to defeat or weaken the Manchin-Schumer agreement, which took K Street by surprise.
“Taxes that discourage investment and price controls that limit innovation will make our current economic problems worse,” U.S. Chamber of Commerce chief policy officer Neil Bradley said in a statement. “Congress should reject these policies and focus on unleashing American made energy.”
The National Association of Manufacturers, which is running ads in the nation’s capital opposing the previously announced slimmed-down reconciliation package over its drug pricing provisions, argued that the minimum tax would undermine the industry’s competitiveness.
“Manufacturers kept our promises after the 2017 tax reforms, hiring more workers, investing in our communities and raising wages and benefits. Raising taxes now will hurt manufacturers’ ability to keep delivering for our people and mean fewer opportunities for Americans already worried about their financial future,” Jay Timmons, the group’s CEO, said in a statement.
Democrats have long lamented that large, highly profitable corporations pay less in taxes than some small businesses due to lucrative tax breaks.
At least 70 public companies made over $1 billion in income in 2020 but paid less than 15 percent in federal taxes, including General Motors, Intel and FedEx, according to a report from Sen. Elizabeth Warren (D-Mass.).
The inclusion of the minimum tax will please retailers, which previously backed the proposal as a way to make the tax code fairer for companies that don’t qualify for as many tax credits.
The minimum tax is the top revenue raiser in the Manchin-Schumer plan, bringing in an estimated $313 billion over a decade. The proposal to allow the government to negotiate drug prices, which is fiercely opposed by the pharmaceutical industry, is expected to save an additional $288 billion.
K Street lobbyists are expected to aggressively mobilize against the deal’s other key revenue raisers. It calls for boosting IRS enforcement, an idea that banks have lobbied against, and closing the carried interest loophole, which would hit investment managers’ bottom line.
Democrats would only need a simple majority to pass the reconciliation package, though various Senate Democrats have expressed skepticism about some of those measures. All eyes are on Sen. Kyrsten Sinema (D-Ariz.), a business community ally who previously backed a minimum corporate tax but has opposed changes to carried interest.