Could the corporate blowback against GOP efforts to rewrite voting rules in Georgia and other states drive congressional Republicans to accept some of President Biden’s proposals to raise taxes on US corporations and, gulp, their shareholders and top executives?
Well, probably not. But the endless stories about the growing rift between big business and many Republicans does make tax politics a bit more interesting than it was, say, a month ago.
We are in the midst of a remarkable stare-down. Some Republicans say they are tired of defending the very low taxes paid by US-based multinational corporations. And some high-profile corporate leaders are criticizing Republican voting initiatives that offend many of their business’s customers. And, besides, some say they are unbothered by President Biden’s proposed corporate tax increases to fund new infrastructure spending and thus have no need for Republicans to go to bat for the status quo.
Indeed, the generations-long warm embrace of the GOP and corporate America has developed a pandemic-like social distance. The rise of the anti-state and anti-corporate Tea Party followed by the rhetorical populism of Donald Trump has cooled their mutual ardor. Of course, Trump’s words were more than a bit belied by his support for the 2017 Tax Cut and Jobs Act (TCJA) that cut taxes—a lot—for business and high-income households.
These days, the battle over the future of the Republican Party is focused, at least in part, on the blue-collar voters Trump so successfully wooed in 2016 and again in 2020. So much of his agenda—anti-immigration, anti-trade, anti-globalism in all its forms—diverged so dramatically from traditional pro-business Republicanism.
Now, this strain of anti-corporate populism seems to be motivating a group of GOP senators who are eying the 2024 GOP presidential nomination. It isn’t new, but it seems to be growing.
Nothing highlights this estrangement more than the recent outspoken criticism by segments of the business of world of what many see as GOP voter suppression laws. Last week, hundreds of businesses and wealthy individuals signed a statement that said, in part, “We all should feel a responsibility…to oppose any discriminatory legislation or measures that restrict or prevent any eligible voter from having an equal and fair opportunity to cast a ballot.”
Even before that statement, Senate Republican Leader Mitch McConnell (R-KY) warned business to “stay out of politics.” A day later, he upped the stakes, warning business leaders they “will invite serious consequences” for such actions, though he later walked that threat back and noted that, of course, business were welcome to make campaign contributions.
However, even that story gets a bit complicated. One reason Republican lawmakers may feel free to bash big business these days is that corporate political action committee (PAC) contributions have become increasingly less important. In 2020, all PACS (including non-business PACs) gave only about 5 percent of campaign donations, only half their share in 2016, according to the watchdog group OpenSecrets.org.
By contrast, more than 40 percent of 2020 campaign dollars came from large individual donors and a growing share came from small donations of $200 or less.
At the same time, much of the business community is relatively unbothered by Biden’s proposed corporate tax increases, many of which target a handful of multinational megafirms rather than Main Street. More than 95 percent of US businesses are taxed directly through their shareholders and pay no corporate income tax. Even the leaders of corporations such as Amazon
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And some Republicans indeed seem disinclined to fight to protect the low effective tax rates of those megafirms. For instance, Sen. Roger Wicker (R-MS) says he’d be willing to raise taxes on the “40 or 50” largest corporations.
But in that same interview, Wicker also related another truism: Republicans won’t roll back the corporate income tax rate cuts included in the TCJA, arguably the signature bill they passed while they controlled the federal government. The TCJA cut the corporate rate to 21 percent from 35 percent in 2017. Biden wants to raise it to 28 percent.
A corporate rate cut of any size is highly unlikely to win GOP support. But would some Republicans quietly accept less salient tax hikes on US-based multinational corporations by, say, adopting some form of Biden’s tougher minimum tax? And would GOP lawmakers be even more likely to do so if groups like the OECD can agree to a multinational minimum tax?
Maybe, though my guess is that in the end, they won’t. Nor will they go along with Biden’s even more controversial proposals to raise taxes, not on businesses, but on their owners. More likely, they’ll use the threat of doing so to convince the CEOs who have opposed GOP voting restrictions to quietly return to the fold.