GOP tepid about repeal of new Democratic tax on big corporations
The Democratic legislation, dubbed the Inflation Reduction Act, imposes a 15% tax on big corporations’ “book income” — that is, the income they report to financial investors rather than the IRS. But the GOP, the party that has championed corporate tax cuts for decades, is not rushing out the gate to repeal the corporate tax provision amid a growing rift with some of the biggest companies in the world.
The antipathy grew after major corporations, such as oil giants BP and Shell, endorsed the politically divided legislation, which garnered no GOP support, angering many Republican lawmakers. Republican members of Congress said the companies were working against pro-commerce policies to garner favor with Democratic lawmakers.
While Republicans see the 15% book income tax as bad policy, caucus members are not likely to take up the cause of repealing the specific tax while campaigning — despite it being the largest tax in the partisan legislation, a person familiar with the thinking of House Republicans said.
The person said that while Republicans would support repealing it, doing so is not “anywhere near” the top list of priorities for Republicans should they regain control.
“There is a limited amount of capital here for us to deploy, and I can’t see this being where they want to focus,” the person said.
Republicans have higher tax priorities. For instance, they wish to extend expiring and expired pieces of the 2017 Trump tax cuts, push for full expensing, which allows businesses to write off the cost of new investments immediately, and prolong individual and business tax provisions that are set to expire in 2025.
Also, the new book tax doesn’t apply to all corporations, just those with adjusted financial statement income exceeding $1 billion, a feature that makes it harder to attack since it only applies to very big businesses.
Shell, BP, and Ford Motor Company joined more than three dozen companies that signed a letter saying that Congress should “quickly pass the Inflation Reduction Act to deliver the investments and incentives Americans need today and to power the economy of tomorrow.”
The endorsement flummoxed some GOP lawmakers who saw the companies as actively working against broader corporate tax interests.
The missive is just one aspect of broader, and deepening, tensions between the party and corporations, including some that have irked Republicans by embracing environmental, social, and governance standards and siding with the Left on hot-button social concerns such as abortion and state voting laws.
Jason Roe, a veteran Republican consultant, told the Washington Examiner that there is a contingent of Republican voters who want to see the GOP go after corporations for perceptions of their “wokeness.”
“Especially after the decades that Republicans have carried water for the business community and protected them, to have this convenient stiff arm at this time is not well received,” Roe said, adding that corporate bailouts have added to the antipathy some conservative voters have toward massive corporations.
Roe said he expects attacks against the increased IRS funding included in the Inflation Reduction Act, rather than the corporate tax hike, to be “front and center in the arsenal of every congressional Republican candidate” heading into this year’s midterm elections. And that does appear to be the game plan for the GOP.
The now-passed legislation provides the IRS with $80 billion over the next decade, more than half of which is earmarked for enforcement. Democrats see the infusion of cash, which is estimated to add more than 80,000 new positions across the IRS, as a wise move because of understaffing at the agency.
Attacks against bolstering the IRS also poll better for Republicans than repealing the book tax.
A Politico/Morning Consult survey found that 43% of voters said they support the funding, while 39% expressed dissatisfaction. The same poll found that 63% of voters support the book tax change while a mere 21% disapprove.
Alex Conant, a GOP strategist and partner at Firehouse Strategies, said the general notion that Democrats increased taxes as part of the Inflation Reduction Act will feature in Republicans’ campaigns this year, but likely not the book income tax specifically — not only because of the growing acrimony between many Republicans and the corporate world but also because of the provision’s complexity.
“It’s something that frankly most people don’t fully understand, and when you’re explaining, you’re losing,” he told the Washington Examiner. “I don’t know that the book tax per se is going to be a rallying cry for a lot of candidates, but I think tax increases in general is always a good issue for Republicans.”
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Conant also said he thinks the feeling of betrayal among GOP leadership and certain corporations is somewhat mutual.
“The populism that you see in the Republican caucus is something that concerns a lot of business leaders. I also think the American business takes climate change more seriously than House Republicans do,” Conant said.
Continue Reading at The Washington Examiner.