For corporate lobbyists pressing on other issues, the tax bill floated Thursday by the House Ways and Means Committee was not the end of the battle. It was the starting gun.
There will be four more versions of the tax bill before it goes to the Senate. And that creates myriad opportunities for real estate agents, small-business groups, home builders, universities, farmers and many more to shoehorn in changes potentially worth billions of dollars apiece.
As these lobbying battles loom on specific issues, companies are weighing the rich benefits of cutting the corporate income tax rate and granting immediate expensing of capital expenditures against curtailment of foreign tax havens and interest deductibility. The bill pits traditional groups supporting the plan — including the National Association of Manufacturers, the U.S. Chamber of Commerce and the Business Roundtable — against its detractors, including traditionally Republican groups such as the National Federation of Independent Business, real estate agents and construction firms.
The National Association of Home Builders (NAHB) is leading the charge against three measures: limits on deductions on mortgages larger than $500,000, the elimination of mortgage deductions on second homes and the doubling of standardized deductions that would render many more mortgage deductions worthless.
"We would like to be for tax reform, but we can't be for it in its current form," said NAHB chief executive Jerry Howard. "It simply amounts to an assault on" the housing business. He has been urging lawmakers instead to substitute a 12 percent tax credit on mortgage and property taxes.
It's an unfamiliar step, and last week House Speaker Paul D. Ryan (R-Wis.) said members weren't comfortable with it. So the NAHB is trying to fix that.
On Friday, Howard started his day with an early morning meeting with Rep. Richard E. Neal (D-Mass.) in the congressman's office. Next he had breakfast with his group's chief lobbyist. Howard then dashed over to North Capitol Street for interviews with C-SPAN and Fox News, although the Fox News spot was too late in the morning for the viewer in chief — President Trump.
Then the NAHB head zipped back to the Capitol to see Rep. Barbara Comstock (R-Va.), seen as a swing vote. Later he had lunch at his desk. Sprinkled throughout the late morning and afternoon were interviews with half a dozen television stations and print journalists. All the while, the group's 20 lobbyists were scattered around the Capitol. By Monday, Howard said, they will have visited every Republican and most of the key Democrats in the House.
Other companies and industries have been blitzing lawmakers, as well. Small businesses, led by the National Federation of Independent Business, want changes in the "pass-through" provision that allows small businesses to treat profits as business income instead of personal income. A business rate of 25 percent would make that attractive.
But the initial bill allows small businesses to use the lower rate only on 30 percent of net income. And it prohibits small businesses in service sectors — such as attorneys, accountants and investment advisers — from taking advantage of it at all.
House Ways and Means Committee Chairman Kevin Brady (R-Tex.) already has altered some provisions in his new markup, giving him about $80 billion to spread among different interest groups. But it isn't clear whether that would go to boosting the pass-through benefits. Under the initial draft, the pass-through measure would cost the Treasury $201.9 billion over the next decade.
Some lobbyists also are jumping ahead to the Senate, where Finance Committee Chairman Orrin G. Hatch (R-Utah) awaits. In the Ways and Means Committee, lobbyists need to persuade half a dozen members to hold up a bill. In the Senate Finance Committee, one member can delay action.
NAHB's Howard said either he or his top lobbyists had met with Sens. Pat Roberts (R-Kan.), Johnny Isakson (R-Ga.) and Dean Heller (R-Nev.) as well as members of Hatch's staff.
"At the end of the day, Hatch will dictate what's in the bill," said a GOP lobbyist who spoke on the condition of anonymity to protect his relationships with House members.
To some lobbyists, one item left out of the House Republican tax bill came as no surprise: the so-called carried-interest clause that allows private-equity firms to save billions of dollars every year.
The item's best lobbyists were not lobbyists at all, but rather key members of the Trump administration with experience in high-powered finance: Commerce Secretary Wilbur Ross, National Economic Council head Gary Cohn and Treasury Secretary Steven Mnuchin.
Under the new tax bill, profits from private-equity firms would be taxed at the low capital gains rate of 15 percent, still well below the 20 percent income tax rate for businesses in general or the 39 percent top rate for individuals. A November 2013 Congressional Budget Office report said that if carried interest were taxed as ordinary income, the Treasury would raise $17.4 billion over 10 years.
Meanwhile, many organizations and lobbyists were battling to fend off items of similar size.
Universities were scrambling to delete provisions that would tax richly endowed universities, slap an excise tax on highly salaried university officials and abolish a tax credit that students use to pay tuition. Pharmaceutical companies were pressing to maintain tax credits for "orphan" drugs and rare diseases.
And makers of electric vehicles are fighting to protect the federal tax credit for EVs. Rep. Mike Bishop (R-Mich) said he fought to keep the credit but lost.
Some issues pit one group against another.
The tax bill took away the ability of banks with more than $50 billion in assets to deduct insurance premiums paid to the Federal Deposit Insurance Corp. It would phase out the deduction for banks with $10 billion to $50 billion in assets. And it would block businesses with revenue above $25 million from deducting net interest expenses exceeding 30 percent of taxable income.
However, it left intact an 83-year-old tax exemption for credit unions that the big banks wanted revoked. The American Bankers Association denounced the credit unions' "outdated, unfair and unreasonable tax advantages."
But the ABA said it was still "looking closely" at the bill.