WASHINGTON (Reuters) - The tax reform tempo is picking up in the Congress, with lawmakers meeting, task forces floating proposals and lobbyists scurrying to get in on the action - a small piece of which recently took place in an historic Capitol Hill meeting room.
There, officials from Exxon Mobil Corp, the world’s largest publicly traded oil company, and refiner Tesoro Corp met on March 14 for almost three hours with Representative Kevin Brady, a Texas Republican, as well as with Representative Mike Thompson, a California Democrat, and others.
“Good discussion. Candid, off the record, informal, which is what we want,” Brady told Reuters after the meeting.
Brady is heading a study team from the tax-writing U.S. House of Representatives Committee on Ways and Means.
Stephen Brown, vice president for government affairs for Tesoro in Washington, said the message to Brady and co-chair Thompson was that the company does not want to be singled out in tax reform.
“There is no justification for discrimination against the oil and gas sector, but in particular against independent domestic refiners,” Brown said.
Meetings like the one Brady hosted are not unusual, but they are occurring with increasing frequency across Washington, according to lawmakers, lobbyists and congressional filing data.
What is behind the boost in activity? Some say a major cause is a ramp-up of tax research at the committee level by Dave Camp, the Republican chairman of Ways and Means, who has said he wants to pass tax reform legislation in the House this year.
Last month, he named lawmakers from his panel to 11 working groups assigned to study specific tax issues, ranging from financial products to real estate, and to report by April 15. Each group is led by one to two Republicans and a Democrat.
The odds seem to stack up against Camp achieving his goal of comprehensive legislation in 2013, most lobbyists and tax experts say. But all agree that he and his colleagues are laying important groundwork.
Democrats and Republicans still disagree about whether or not tax reform should raise new revenues. Many Democrats say it should; Republicans disagree. Many Democrats want to cut tax preferences for investment income; Republicans oppose this.
Overall, the Ways and Means study effort “helps Camp’s cause, though I still think that getting tax reform this year is going to be a heavy lift,” said Cathy Schultz, lobbyist for the National Foreign Trade Council. Her group’s website says it represents companies such as heavy equipment maker Caterpillar Inc and Pfizer Inc, the largest U.S. drugmaker.
The Ways and Means international tax team met earlier this month with officials from Procter & Gamble. On the team’s agenda is possibly changing the U.S. worldwide tax system, in which all corporate income is subject to tax, to a territorial regime that would exempt most foreign-earned profit from tax.
Jennifer Chelune, spokeswoman for P&G, the world’s largest household products maker, said it is pushing for a lower tax rate and for moving to a territorial tax system.
Amid the buzz of activity around issues like these, the number of new tax lobbyists, already large, is rising again.
In February, 22 firms registered to lobby on tax issues, while in March, there were 25 new registrations in the first two weeks alone, according to data compiled from federal filings by the Sunlight Foundation, a non-partisan group that focuses on lobbying and fundraising in politics.
By comparison, only three new lobbying registrations for immigration issues and six for financial services were filed over the first two weeks of March. Each registration lists multiple individual lobbyists.
Roughly 1,700 companies and interest groups were registered in 2012 for tax lobbying.
Republican Representative Aaron Schock is co-chairing, with two other lawmakers, the Ways and Means financial products group, which is tackling controversial ideas floated last month by Camp, including taxing most derivatives at fair-market value.
“It has allowed the three of us in each of those working groups to kind of become the point people,” said Schock, from Illinois, in an interview.
In the Senate, Camp’s counterpart, Finance Committee Chairman Max Baucus is holding private committee meetings weekly. But Baucus, a Democrat from Montana, has not appointed lawmakers to lead on specific tax topics. A rough list of potential tax reform ideas was circulated on Thursday among members of Baucus’ panel.
An important backdrop to the renewed bustle over taxes in Congress is the range of clear tax reform positions put in place over the years by Democratic President Barack Obama.
For instance, Obama has called for preventing energy companies from using a manufacturing tax break. On another front, Tesoro would be hit by Obama’s proposal to end “last in, first out accounting,” known as LIFO.
This accounting method, widely used in the energy sector, helps companies keep their tax bills lower when their inventory costs are rising, compared to an alternative method. The White House says it is a way to understate taxable income.
Even if compromises on such issues remain out of reach, lawmakers and lobbyists praised the effort. Democrats and Republicans, who rarely socialize or even converse much in a sharply polarized Congress, may be finding common ground as they are thrown together on the teams.
“Opinions are going to be shaped during this process and once someone forms an opinion, it is more difficult to change their mind,” said Mary Burke Baker, a former congressional staffer and now a lobbyist for major corporations at K&L Gates.
Editing by Kevin Drawbaugh and Jan Paschal