Lawmakers on the congressional committee that will finalize the Republican tax bill will likely be hearing from their former employees, if they haven’t already. Former staffers of six of the nine U.S. representatives appointed to the committee have lobbied the House on tax issues this year, according to federal records reviewed by International Business Times — and some of them represent corporations and industries that could benefit significantly from the bill.
House Speaker Paul Ryan has named nine Republicans to the House-Senate conference committee that will iron out the details of the bill before it goes back to both chambers for another vote. Three of the nine come from California and Illinois, whose populations could face tax increases because the federal legislation reduces the deductibility of state and local taxes.
The prospect of sweeping tax reform has generated a lobbying blitz in Washington. More than 6,200 lobbyists tried to influence members of Congress on tax issues this year, according to a report by Public Citizen. That K Street army descended on Capitol Hill as the public was left largely in the dark: There were no public hearings on the Senate version of the bill — which in any case was changed at the last minute by Texas Sen. John Cornyn’s lengthy amendment late on Friday night.
At least 12 former staffers of GOP conference members have lobbied the House on tax policy in 2017, according to federal lobbying records. As structured right now, the tax bill appears to be a jackpot for the commercial real estate industry, big tech companies, private aviation management firms and fossil fuel giants. Those four interests hired lobbyists who served as aides to the lawmakers who will iron out the final legislation. They are:
Rep. Diane Black (TN-6), chair of the House Budget Committee, has two former staffers lobbying the House on tax issues. One is Annie Palisi, Black’s former chief of staff and 2010 campaign manager who joined Heather Podesta’s Invariant LLC in December 2016. Palisi lobbied the House on tax matters on behalf of the National Association of Real Estate Investment Trusts. The New York Times reported Tuesday that tax loopholes may make the real estate industry — which enriched President Donald Trump and his son-in-law and close adviser Jared Kushner — the biggest winner in both the House and Senate tax bills.
Real estate investment trusts (REITs) are companies that own, finance and operate real estate. Investors can buy in to bundles of real estate assets, including buildings and mortgages, put together by REITs. These trusts don’t pay corporate taxes but pass their income along to shareholders, who pay income tax on their share. Both tax bills allow investors in REITs and other pass-through entities to pay a much lower tax rate on these earnings than is required for regular income. In addition, those who borrow money to invest in a REIT will be able to deduct the interest they pay on those loans at the top individual tax rate.
The REIT provisions in the tax bill are “going to create giant new tax shelters,” Steven Rosenthal of the Tax Policy Center told the Times. The Trump Organization and Kushner Companies have major deals with REITs.
Cornerstone Government Affairs VP Chris Sarley left the office of Rep. John Shimkus (IL-15) this April after nine years there, mostly as policy director. He immediately began lobbying the House on “comprehensive tax reform” for Microsoft in the second quarter of 2017 and continued to do so during the third quarter.
Microsoft, along with other big tech companies, stands to gain from the House tax bill’s one-time reduction in the tax rate on repatriated funds. The company as $128 billion held by foreign subsidiaries, and it could bring that money back to the U.S. at a rate of 12 percent for cash and 5 percent for non-cash returns. Among tech companies, only Apple will be able to gain more from this provision.
Natasha Hammond, Ryan’s assistant for policy from October to November of 2015 who now works at Squire Patton Boggs, lobbied the House in the third quarter on federal excise tax issues on behalf of private jet management company NetJets. Ryan is not on the conference committee but is a co-sponsor of the House’s tax bill.
The Senate’s tax bill clarifies a gray area around taxes on jets: whether or not such companies, which manage and rent out owners’ private jets, should pay a 7.5 percent excise tax on its management fees to owners, who would likely see their fees increase as a result. The House bill does not address this, but companies such as NetJets surely want the final bill to include this clarification, which officially exempts companies from this tax. As of now, the tax is on hold, but the Internal Revenue Service could change sides on the issue and begin imposing it.
Ohio-based NetJets has sued the IRS over this issue three times, winning verdicts in 2011 and 2017, and Democratic Sen. Sherrod Brown and Republican Sen. Rob Portman co-sponsored a bill with language similar to that in the current Senate tax bill.
Fossil Energy Companies
Energy companies are lobbying on various aspects of the bill including master limited partnerships (MLPs), financial vehicles typically owned by a parent company or its subsidiaries that exempt energy investments from corporate taxes. (REITs avoid taxes in a similar way.) A provision in the Senate bill added by Sen. Cornyn also reduces the income taxes on profits that individual investors earn from MLPs.
Many oil and gas companies that operate MLPs are based in Texas — represented by the primary sponsor of the House tax bill, Rep. Kevin Brady (TX-8), who is chair of the conference committee and chairman of the House Ways and Means Committee. Aindriu Colgan, Brady’s legislative director from 2014 to 2016 and his legislative assistant before that, represented Houston-based Phillips 66 as he lobbied the House this year. The company reported hiring Colgan’s firm, The Ferguson Group, to lobby on tax reform issues including MLPs and the border adjustment tax. Phillips 66 backs Phillip 66 Partners, an MLP oil and gas pipeline operator.
Texas-based MLPs give generously to lawmakers from their state who will likely legislate in their interest. Brady was the second-highest recipient of 2016 campaign cash from Dallas-based Energy Transfer Equity, an MLP that operates another MLP, Energy Transfer Partners.
NextEra Energy, which also controls an MLP, has lobbied members of the conference committee but did not mention MLPs specifically in these reports.
Health care policy has also been a source of debate on the tax bill. The Senate version repeals the Affordable Care Act’s requirement that everyone obtain health insurance — known as the “individual mandate” — which experts say would gut the historic 2010 policy. Another issue of interest to health care companies is a small excise tax on the wholesale price of medical devices imposed by the Affordable Care Act, something the medical device industry opposes.
Katie Allen, a former senior legislative assistant to Black, represented trade group America’s Health Insurance Plans (AHIP) on a host of tax issues during the third quarter of 2017, including the individual mandate. On Nov. 14, AHIP and medical and hospital groups sent a letter to House and Senate leaders, urging them not to repeal the individual mandate, saying, “Eliminating the individual mandate by itself likely will result in a significant increase in premiums, which would in turn substantially increase the number of uninsured Americans.” The House bill left the mandate intact, but the Senate bill eliminated it.
Lori Harju, who left her post as Brady’s senior adviser on the House Ways and Means Committee in December 2016, was back in the House offices weeks later, in the first quarter of 2017, representing medical device company Baxter Healthcare Corporation on device tax, corporate tax rates and other tax-related issues.
More Industries Hire Former House Staffers
Harju, also Brady’s former deputy legislative director for five years, represented the Credit Union National Association on the preservation of credit union tax status, an “untouchable tax break” that credit unions were able to keep. This year, the Credit Union National Association’s political action committee has donated $9,000 to Brady’s campaign, and the securities and investment industry is his most generous industry, according to data compiled by the Center for Responsive Politics.
As a lobbyist and vice president with the Alpine Group, Barry Brown, Brady’s legislative director from 1997 to 2000, represented Nike on issues including the corporate tax rate and the tax on repatriation of foreign earnings, and the U.S. Tire Manufacturers Association on import taxes.
In addition to former aide Sarley, two other former Shimkus staffers have lobbied the House on tax policy in 2017. Greta Joynes, who worked for Shimkus for nearly 14 years, left her post in March for a job with Brownstein Hyatt Farber Schreck and was lobbying Shimkus in the second quarter on real estate-related tax reform on behalf of the American Tower Corporation. Maureen Tracy, who was a legislative staffer and then director for Shimkus from 2002 to 2007, is now senior director for government affairs at Illinois-based Verex Imaging Corporation. She’s lobbied her former boss during all three quarters of this year.
Two former staffers of Rep. Greg Walden (OR-2) have lobbied the House on tax issues this year. Blair Larkins, an assistant to Walden from 2005 to 2010 who is now director of legislative affairs at the Bockorny Group, lobbied the House on behalf of the conservative business advocacy group the Job Creators Network. Former Walden legislative assistant Daniel Fernandez, also of the Bockorny Group and formerly a VP at the American Bankers Association, lobbied the House on tax reform for Majestic Steel USA. Another former staffer, Lauren Flynn of K&L Gates LLP, registered in October to lobby Congress for the Coalition for Energy Efficient Jobs and Investment on tax issues.
Reps. Peter Roskam (IL-6) and Rob Bishop (UT-1) also have former staffers lobbying the House on tax issues for the University of Illinois and Vista Outdoor, respectively. Another of Ryan’s former staffers has also been visiting congressional offices to talk tax reform. His former House floor director Ann Bradbury, now VP at The Duberstein Group, lobbied the House for several companies including Amgen, Dow Chemical and Duke Energy Business Services.Business0