The Wall Street Journal-20080119-Business Seeks Share of Stimulus
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WASHINGTON -- With talk of fiscal stimulus in the air, business lobbyists are busily repackaging their favorite tax cuts as emergency cures for an ailing economy.
Despite signs that the White House and Congress are negotiating a relatively narrow plan to stave off recession, corporate lobbyists are drawing up wish lists that run the gamut from a tax break for home offices to renewal of a decades-old credit for research and development.
President Bush yesterday said he wants "direct and rapid" tax relief for individuals and tax incentives for businesses "to make major investments in their enterprises this year."
So it is no surprise in Washington that business lobbyists are pitching their favorite tax breaks to the administration and Congress. "No one with an idea has been shy about dialing the White House extension and giving their views," says Tony Fratto, a Bush spokesman.
The National Federation of Independent Business, which boasts 350,000 members, most with 10 or fewer employees, is circulating a two-page list of tax-break requests to the White House, Treasury and Capitol Hill, including such items as raising the standard per-mile tax deduction for business use of a private car and creating a standard write-off for home-office costs.
"If the policy makers are going to move down this track and look at business-related provisions, then we think small business ought to be a significant part of that debate," says Dan Danner, NFIB's executive vice president for public policy.
At a meeting this week with Treasury Undersecretary Robert Steel, Jerry Howard, chief executive of the National Association of Home Builders, suggested that a perennial effort to expand the reach of mortgage giants Fannie Mae and Freddie Mac could be part of a stimulus package. (Mr. Steel gave no indication that the administration is willing to link the two efforts.)
The U.S. Chamber of Commerce is floating the idea of a permanent reduction in the 35% corporate-tax rate. The National Association of Manufacturers is pressing for a reduction of the corporate capital- gains tax rate to 15% from 35%, as well as renewal of the R&D tax credit. "When you're looking to create jobs and stimulate the economy, that's one that would be helpful," says Dorothy Coleman, NAM's vice president of tax and domestic-economic policy.
High-tech companies generally support a rule that would allow companies to write off in one year a large portion of the cost of new equipment, a policy they hope would boost business purchases of computers and software.
Mr. Bush has put that rule, called bonus depreciation, on his own list of likely stimulus measures. But the Information Technology Industry Council also has floated a more targeted version aimed at driving up purchases of health-information technology products and energy-saving electronic equipment.
To some degree, the scramble for tax benefits is pitting manufacturers against companies that deal directly with the buying public. The former are pushing for corporate-tax breaks that have long eluded them, while the latter argue for new rebates or other benefits that go first into consumers' pockets -- and ultimately into their own.
"We feel some form of stimulus package would be appropriate, but we would encourage business representatives not just to dust off their old ideas for tax reform and put them forward yet again," says Tim Hammonds, chief executive of the Food Marketing Institute, which represents 1,500 grocery-store companies. The institute is lobbying for expansion of the food-stamp program and unemployment-insurance benefits, measures popular with Hill Democrats.
One prominent business lobbyist predicted that any stimulus package that eventually becomes law will be fairly narrow in scope, since only by leaving out extraneous measures will both lawmakers and the president find common ground. That would counter a frequent criticism of such packages: that they become Christmas trees on which companies and lawmakers hang their favorite baubles. Already Mr. Bush has agreed to set aside -- for the moment -- his push to convince Congress to extend his signature tax cuts.
"The Christmas season has come and gone," Treasury Secretary Henry Paulson said Friday. "We're not trying to decorate a Christmas tree here."
