Lobbying had a great holiday....

‘It’s a giant present to the tax lobbying community’

K Street lobbyists are banking on years of paydays from the tax overhaul.

By THEODORIC MEYER

President Donald Trump just signed into law the biggest tax overhaul in a generation, but that means more work — not less — for Washington’s tax lobbyists.

Rather than streamlining the tax code, Republicans have made it more complicated by jamming through a new series of temporary tax breaks for everything from craft brewers to citrus growers. Lobbyists expect these breaks, known as tax extenders, to generate paydays for years.

Adding to their workload: Republicans rammed their bill through Congress so quickly that it’s almost certain to require follow-up legislation to fix the mistakes and miscalculations still being discovered, according to interviews with half a dozen tax lobbyists.

“Trump said this was a giant Christmas present to the American people,” said John Raffaelli, a former Senate tax aide and the founding partner of Capitol Counsel, a prominent lobbying firm. “Well, it’s a giant present to the tax lobbying community as well because of the extenders.”

Russ Sullivan, a lobbyist at McGuireWoods Consulting and a former aide to the tax-writing Senate Finance Committee, said the new law would be a “bonanza” for lobbyists.

“If you want to use insurance terms, tax lobbyists just purchased an annuity that will provide benefits for years,” Sullivan said.

Republicans’ hastily written tax bill left many of the details vague, to be ironed out later by the Treasury Department and clarified through regulations.

Companies are now combing through the law to figure out exactly how it will affect them, and their lobbyists are already working to persuade the Treasury Department to draft rules in ways that benefit them.

“People are already going in to see Treasury,” said Jeff Forbes, a founding partner at Forbes Tate Partners and another veteran of the Senate Finance Committee.

As the full impact of the bill becomes clear, companies and trade groups are expected to press lawmakers to take up what’s known as a technical corrections bill to fix mistakes and oversights.

Passing such a bill may not be easy, since Senate rules won’t allow Republicans to pass it with just 50 votes the way they did with the tax bill. That means they’ll have to win over at least nine Senate Democrats, none of whom supported Republicans’ tax overhaul. (Doug Jones, the Democratic senator-elect from Alabama who will take his seat this week, wasn’t in Congress when the bill passed.)

Hashing out such a bill could take years.

It took more than two years for Congress to jam through a major technical corrections bill after the last time it overhauled the tax code, in 1986.

Any delays in passing such a bill will only “add to the pressure to get into see Treasury,” said Sage Eastman, a Republican tax lobbyist at Mehlman Castagnetti Rosen & Thomas.

Companies and industries that cheered Republicans’ tax bill will be keeping a close eye on any new legislation that could diminish the value of hard-won tax breaks. “Anybody who has an issue who was taken care of in this tax bill is going to be paying attention, if not downright aggressive, in 2018,” said John Keast, a lobbyist with Cornerstone Government Affairs.

Lobbyists are also likely to profit from industries’ efforts to hang onto temporary tax breaks set to expire in coming years.

Take craft brewers, for instance, who spent years fighting for a break included in the bill that’s estimated to save the industry $4.2 billion over the next few years but expires at the end of 2019. The industry is already fighting to save the tax break, said Brewers Association chief executive Bob Pease, with a Washington fly-in planned for the spring.

“We have 6,000 foot soldiers,” Pease said. “I can bring hundreds of brewery owners to Washington at their expense to come here and tell their story to members.”

A provision that allows businesses to deduct a portion of their interest payments from their tax bills — prized by companies such as manufacturers that often have significant debt — is set to be sharply curtailed at the end of 2021.

“I can guarantee you there will be a very aggressive and expensive campaign to not let that happen,” said Ken Kies, a veteran tax lobbyist.

Republican lawmakers stuffed their tax bill with expiring provisions as a way to limit how much the bill added to the deficit, which couldn’t exceed $1.5 trillion under the rules of the process Republicans used to pass the bill.

The glut of expiring provisions in the bill comes just two years after Republicans and Democrats struck a deal to make the most popular extenders permanent. Lawmakers at the time hoped that doing so would rein in the annual ritual of extending dozens of tax breaks — a reliable source of work for lobbyists.

Congress was never able to kill off extenders entirely. Senate Finance Chairman Orrin Hatch (R-Utah) introduced a new bill to revive nearly three dozen expired tax breaks the same day Congress passed the tax overhaul. Congress is expected to take it up in the next few weeks.

The success of lobbying efforts to save tax breaks may depend on whether Democrats or Republicans have control of Congress when they expire.

“Let’s just say in theory that the House or the Senate flips,” said Randall Gerard, a lobbyist at Cogent Strategies, the new firm started late last year by the longtime chief executive of the Podesta Group. “What’s the business community going to do to prevent a rollback of this?”

With Republicans in danger of losing their majorities in the House and the Senate in this year’s midterm election, Gerard said he would advise companies and trade groups to reach out to moderate Democrats who didn’t vote for the bill but may be sympathetic to some of its provisions.

Companies and trade groups seeking technical corrections this year will need to appeal to Democrats, too, since such bills can’t be passed through reconciliation. Kies, the longtime tax lobbyist, said he was skeptical that Democrats and Republicans would be able to work together in the current environment, but that Democrats might have some incentive to do so.

“I’m not sure Democrats on the tax-writing committees want to spend another year being completely irrelevant,” Kies said.