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Lobbying Spending Spikes Against Paul Ryan’s Border Tax

  • Ashley Leader
  • July 22, 2017
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Obamacare has proven unexpectedly difficult for Republicans to dismantle. As a result, the GOP is anticipated to focus the bulk of its future efforts on tax reform instead.

The new GOP tax plan put forth by House Speaker Paul Ryan includes a border-adjustment tax. Under this type of tax system, all domestic consumption would be taxed, while exports would be untaxed. Over the course of a decade, this provision is anticipated to bring in about a $1 trillion, which could be used to offset the tax cuts promised by the GOP.

Under the proposed plan, the corporate tax rate of 35% would be replaced by the border-adjustment tax. Corporate exports would not be taxed under this plan. So the proposed tax change is anticipated to benefit large corporations who have strong footholds in foreign markets and export large quantities of goods.

The recent legislative shift in focus from healthcare to taxes has already had repercussions in lobbying spending.

Healthcare companies are beginning to spend less on lobbying as a result of the legislative stall on the healthcare front. Companies such as Novartis AG and Teva Pharmaceuticals Industries Ltd. decreased their spending in 2017 from the first quarter to the second quarter, as did the American Hospital Association and insurers such as Aetna Inc. Meanwhile, outlier Cigna Corp. increased its lobbying spending by $690,000.

Even as healthcare companies relax spending on lobbying, retail coalitions are spending more on tax lobbying.

The National Retail Foundation is a trade group of retailers who rely on imports and are vehemently opposed to the proposed border tax. They claim it amounts to an import tax, which would harm their import-heavy business. The NRF also claims the tax would raise prices on consumer goods.

In the three months before June 30, the National Retail Foundation spent almost $5 million to fight the proposed levy. That’s an increase of about $3.32 million over spending in the same time period in 2016. The National Retail Foundation has spent $7.3 million on lobbying in 2017.

The Retail Industry Leaders Association is yet another trade association to increase its tax lobbying spending. In the second quarter the group increased its spending by $120,000 dollars. The RILA has already spent $1.5 million total on lobbying in 2017.

Nike Inc. and Best Buy Co. Inc. similarly increased their lobbying spending in the second quarter. Earlier in 2017, companies such as Target Corp., Best Buy Co. Inc. and Gap Inc. dramatically increased their lobbying spending as well.

Export-focused companies and other supporters of the proposed tax are also upping spending. Companies such as General Electric Co. and Dow Chemical Co. claim that the proposed tax would improve U.S. business by strengthening the dollar. General Electric Co. has accordingly increased its lobbying spending in 2017 by $410,000.

Groups are also increasing spending in opposition to other aspects of the proposed tax law. The Save Our Savings coalition formed in April to fight a proposed tax change which would reduce tax advantages for retirement savings accounts. The White House has stated that 401(k)s will not be affected by the proposed tax changes, since 401(k)s are not funded by taxed dollars. Still, the proposed tax change might have serious implications for people who rely solely on their savings to survive.

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Give me a book and a pair of running shoes and I will be pretty satisfied with life.