Executives at America’s largest corporations watched Donald Trump sign a massive tax-cut bill without any change in their own companies’ tax rates — and were grateful for their good luck.
For most C-Suite occupants, the paramount objective in the frenetic deal-making over the multitrillion-dollar tax-cut package was always protecting what they already had: a permanent cut in the corporate income tax from 35% to 21% they won under Trump’s 2017 tax law that has broadly benefited companies from Verizon Communications Inc. to WalMart Inc.
Corporate lobbyists entered this year’s fracas well aware that nothing is truly permanent in tax law when a congressional majority and president are determined to enact sweeping change. And they were wary of the risk lawmakers could partially roll back the corporate rate cuts to help defray the cost of more popular tax relief benefiting small businesses, individuals or tipped workers.
“There is always a universe where Congress is looking for pay-fors,” Charles Crain, the National Association of Manufacturers’ managing vice president of policy, said. “We have been really clear that the corporate rate should not be on the table from a negotiating perspective, and it turned out that it wasn’t.”
In the end, congressional Republicans seeking to partially offset revenue losses from the tax reductions largely stuck to cuts in safety-net programs such as Medicaid and rolling back clean-energy tax breaks passed under Democratic President Joe Biden. The remaining $3.4 trillion in projected additional deficits from the package wasn’t offset.
Trade associations mounted no major lobbying effort to get Republicans to deliver on a Trump campaign promise to further cut the corporate tax rate to 15%.
Instead, they won a series of new permanent business tax breaks covering interest expensing, research and development spending and bonus depreciation of certain assets, including machinery and factories. Those provisions together are worth more than $500 billion over the next 10 years, according to Congress’s Joint Committee on Taxation.
Those breaks are especially valuable for the manufacturing industry, including equipment companies like John Deere and Caterpillar Inc. Pharmaceutical companies like Pfizer and Eli Lilly also stand to gain from research deductions.
Corporate lobbyists’ favorable position going into the tax fight flowed from a strategic choice Republicans made in 2017 when they passed Trump’s first administration tax cuts. They made corporate tax cuts permanent, in part by saving money on more-popular cuts benefiting individuals and pass-through businesses by making them temporary.
“The judgment was a political one,” Princeton University economist Owen Zidar said. “The idea was it was going to be really hard to have tax cuts expire for the middle class and for a broad range of people, so we can make those cuts temporary.”
Staving off an end-of-the-year tax increase threatened by those provisions’ expiration in turn became a central argument for passing the president’s new tax legislation. Even so, the tax and spending package only made it through the Senate with a tie-breaking vote cast by Vice President JD Vance.
Key trade groups representing Corporate America such as the Business Roundtable and the U.S. Chamber of Commerce applauded the outcome. Among the reasons both groups cited in their statements: no change was made to the corporate tax rate.
