Efforts target lawmakers whose support Nancy Pelosi needs to overcome GOP protests
Drug companies, oil and gas firms, tobacco corporations and lobbyists for other US industries are pressuring allies in Congress to raise billions of dollars from their industries to help pay the bill.
Private-equity firms such as Blackstone Inc.
and Carlyle Group Inc. are fighting changes that would cost the industry more than $1 billion annually, primarily by increasing the investment period required to qualify for preferential tax treatment.
Drug-industry lobbyists are working to remove provisions that could cost the industry a combined $700 billion over a decade, including one that allows the government to provide wholesale discounts for drugs through Medicare. will allow you to negotiate.
Tobacco companies and convenience stores are trying to eliminate tax increases on tobacco and e-cigarettes. And the plastics industry says an effort to tax manufacturers of single-use disposable items will increase consumer costs by more than $100 billion.
The $3.5 trillion bill covers much of Biden’s domestic agenda, which includes measures to tackle climate change, reduce income inequality, improve public health and boost education.
To be sure, industry lobbying efforts are far from the biggest hurdle in the law’s way. Republicans oppose the bill mainly because it would increase the size of the federal government.
The law is also threatened by a separate battle between centrist and progressive wings of the Democratic Party over the overall cost of the package.
House Speaker Nancy Pelosi (D., Cal.) expects to turn legislation this week after Democrats approve an infrastructure package, but she has more than a handful of Democrats to move the bill through the House. Can’t afford to lose.
This has given more leverage to industry lobbyists. If lobbyists persuade a small group of Democrats to oppose a tax hike on a particular industry, they would actually sabotage Mr. Biden’s domestic agenda.
For example, lobbyists for the oil and gas sector are seeking help from Representative Henry Kueller (D., Texas) and other Democrats in oil-producing states. The energy industry, led by the American Petroleum Institute, is fighting tax changes that would cost oil billions of dollars by eliminating the deductions companies currently receive for tax paid overseas.
Mr Kueller and two other Democrats sent a letter to Mrs Pelosi on Friday in which they protested the measures that hurt the domestic energy industry.
Broadly speaking, businesses are grappling with the sweeping tax hikes sought by Biden and Democratic leaders. The bill would greatly reduce the corporate rate reduction enacted in 2017 by former President Donald Trump and congressional Republicans. It would increase the top rate for capital gains taxes and increase taxes on other business activities.
To fight those tax hikes, companies are typically working through trade unions and lobbying alliances.
The so-called rate coalition is focused on backing Mr Biden’s plan to raise the top corporate tax rate to 26.5% from the current rate of 21%.
alliance, in which AT&T . companies such as Inc.,
home depot Inc.
and CVS Health Corporation
, says raising the corporate tax rate without closing the loophole will do nothing to advance Mr Biden’s goal of ensuring that no companies avoid paying taxes.
The group is running ads in Arizona, New Hampshire and Virginia and pressuring Democratic lawmakers to oppose the rate hike. “We’re asking Sen Cinema not to raise taxes on companies,” says a small-business owner in an ad broadcast in Arizona, referring to that state’s centrist Democratic senator, Kirsten Cinemas.
Lobbying efforts by individual industries could be a major threat to Biden and party leaders as some Democrats are closely aligned with the industries targeted.
The pharmaceutical industry has already shown success in rallying opposition to parts of the bill from Democratic lawmakers who represent large numbers of drug-industry workers. When the House Energy and Commerce Committee debated the bill this month, three Democrats with the pharmaceutical lobby and Republicans voted against allowing the government to negotiate drug prices for Medicare.
The opposition prompted Mrs Pelosi to move that part of the bill to the Ways and Means Committee, where the drug lobby has fewer Democratic allies.
Other industries are seeking an alliance of their own with Democrats. Opponents of the new taxes on cigarettes and tobacco hope to win support from Black Democratic lawmakers, arguing that higher taxes would increase the sale of illicit tobacco, increasing conflict with law enforcement that has led to violent encounters in urban districts, Such as the death of 43-year-old Eric Garner in 2014.
The bill proposes doubling the federal excise duty on cigarettes, which is now about $1 per pack. It would also impose a higher tax on smokeless tobacco, which is currently taxed at levels below that of cigarettes, and for the first time impose a federal tax on vaping products, which, according to a congressional analysis, totaled $96 billion. collects.
Convenience store lobbyists are warning Democrats that a sharp increase in the federal tax could boost tobacco sales on the black market and street sales of cigarettes. Cigarettes, smokeless tobacco and e-cigarettes are vital to the business of the nation’s convenience stores.
The industry also argues that the cigarette tax violates the Biden administration’s regularly repeated pledge not to raise taxes on those earning less than $400,000 annually.
Lobbyists for private-equity firms are also reaching out to black lawmakers, saying African-American investors will be hurt most by the change.
The House bill seeks to raise $14 billion over 10 years, partly by increasing the period from three years to five years required to qualify for the capital gains tax rate. Lawmakers also changed the definition of the holding period in such a way that investment managers would be required to pay taxes at a higher personal income tax rate.
The private-equity lobby says the changes will disproportionately affect private-equity investors who are African-American, Hispanic or female, as larger funds will be discouraged from expanding their pool of investors and investments.
“Those who will be most affected are small managers and diversified managers,” says Robert Greene, president and CEO of the National Association of Investment Companies, which represents 135 minority- and women-owned private-equity firms of management. Under total $250 billion in assets.