What can be worse than the threat of a tax increase? On the policy front, it means that government is having trouble paying its bills. On a personal level, it means that somebody's about to get lighter in the wallet.
But for lobbyists a tax increase is ecstasy. When citizens or companies think they're about to get whacked, lobbyists' incomes soar. The greater the danger of tax calamity, the higher the billable hours of Washington consultancies.
A King and Spalding news release touted former senator Dan Coats's activities for the firm's government relations practice.
(Fritz Reiss -- AP)
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Nobody is talking publicly about tax hikes. After all, the Republicans in charge hate the idea of raising bucks for Uncle Sam.
But tax experts are quietly preparing for all sorts of tax enhancements anyway. With a budget deficit that last year exceeded $400 billion no other action makes sense. Indeed, the talk of the tax world revolves as much around finding new sources of revenue as reducing existing ones.
And it's not idle chatter. Earlier this year, Congress's brain trust on revenue issues -- the Joint Committee on Taxation -- published a menu of tax increase proposals for the first time since the late 1980s. "Options to Improve Tax Compliance and Reform Tax Expenditures" may not be a New York Times best seller, especially at 430 pages. But it is a concrete sign that lawmakers might soon get serious about closing the budget gap.
Or at least not making it worse. Lawmakers are poised to reduce taxes overall by extending tax cuts that are soon to expire. But, due to the deficit, they will also want to keep the revenue hemorrhage to a minimum by paying for expensive changes by altering other laws.
In other words, raising taxes. Elected officials won't call it that. The euphemism of choice is "finding offsets." But whatever they're called, they hurt.
Enter the lobbyists.
Robert J. Leonard was a top aide to the House Ways and Means Committee when the joint committee last produced its options. He still remembers the outraged calls he received from the representatives of companies and industries that the document targeted.
"How dare you," they said. Or -- "Surely, you're kidding. You can't do this to me!"
Leonard's reaction was a wry smile. "Hey," he told them. "It's good for business." And after a moment's reflection, they had to agree. They would all send copies to the home office and ask, "See how much you need me?"
That's exactly what's happening now. Leonard, a lobbyist with Clark Consulting Inc.'s Federal Policy Group, said of the new document, "There are some things in there that have caught the attention of clients." As a result, he said, there could be additional business down the road.
Indeed, Washington's most boring pamphlet has become K Street's hottest marketing tool. There's something among the options to scare almost everyone -- from families who use dependent care benefits to help pay for nannies to companies that deal in tax-exempt bonds.
Accountants and tax lawyers are especially agitated about the options that would pare back preferences that lower taxes for multinational corporations. Democrats made hay in the last election by upbraiding such corporations for sending jobs abroad. Suggestions that would curb the offenders' tax breaks could prove hard to resist this year, especially when revenue raisers are in high demand.
