Companies Promote Corporate-Tax Overhaul

LOUISVILLE, Ky. -- Large companies, looking for every angle to prod Congress into making the corporate-tax changes they have been seeking for years, are turning to some in-house muscle: employees and customers.

Beyond efforts by corporations' lobbyists and a television-ad campaign run by the Business Roundtable, an association of CEOs, companies are now seeking to rally broader public support for business-tax cuts. They are inviting senior lawmakers to their facilities this summer and encouraging workers to contact their representatives in Congress.

"We believe this issue's so important that you've got to get engaged. We can't ensure success. We can ensure that our point of view and our customers' point of view is heard," David Abney, the chief executive officer of United Parcel Service Inc., said in a brief interview Tuesday.

Business executives, though wary of direct connections with the White House after President Donald Trump's comments about white-nationalist protesters last week, remain deeply involved in promoting one of his major policy objectives.

Mr. Abney hosted Rep. Kevin Brady (R., Texas), chairman of the Ways and Means Committee, at the company's global air hub in Louisville and bolstered the chairman's tax-code pitch. The lower rates and permanent changes Mr. Brady envisions, he said, would encourage UPS to accelerate already-planned domestic investments.

Mr. Abney provided Mr. Brady with a forum to speak to more than 100 employees in an airplane hangar. The lawmaker also fielded questions from Louisville-area business executives that use UPS, toured some of the 155 miles of conveyor belts and saw parcels headed to his hometown's ZIP Code.

"You leave tax reform just to Washington, it won't get done," said Mr. Brady, who was joined by Rep. Andy Barr (R., Ky.) and Rep. Trey Hollingsworth (R., Ind.).

Before Congress' fall push for a tax bill, Mr. Brady has been busily adding to the 2.5 million frequent flier miles he mentioned to the UPS employees. He visited alcohol maker Brown-Forman Corp. in Kentucky on Tuesday, following a visit to Best Buy Co. in Minnesota last week and a speech at former President Ronald Reagan's California ranch.

Mr. Brady plans to head to Dallas Wednesday for a similar employee town hall at AT&T Inc. and a local Chamber of Commerce event. House Speaker Paul Ryan (R., Wis.), meanwhile, is scheduled to be in Oregon at Intel Corp. on Wednesday before heading to Everett, Wash., Thursday to meet with workers at Boeing Co.

Businesses can have a tough case to make in connecting the corporate-tax cuts they seek with benefits for the broader public.

Companies and Republicans argue that corporate tax cuts would help workers because they would encourage productivity-boosting investments and lead to wage growth in the long run. Treasury Secretary Steven Mnuchin said on Monday that most economists think labor pays 80% of the corporate tax.

Official estimates by the congressional Joint Committee on Taxation and the Treasury Department point in the opposite direction, showing that owners of capital pay 75% to 82% of corporate taxes.

Mr. Abney said he thought UPS employees -- more than 300,000 in the U.S. -- understood the broader benefits of the tax changes the company seeks.

"We talk to them about how it benefits our customers," he said. "It will create more packages for us. That creates more jobs and that's something that every UPSer can understand."

Bill Samuel, a government affairs executive at the AFL-CIO, said workers should be wary of these arguments from executives and conscious of the ultimate cost.

"They should be skeptical that they're not hearing the full story," he said. "They'll pay for them in decreased services."

Companies don't all agree on the details of a corporate tax bill, and their positions are bound to fracture somewhat as soon as Mr. Brady releases legislation, which could happen next month. Mr. Brady said he wasn't sure yet whether lawmakers and Mr. Trump's administration would unveil a more detailed framework next or whether he will start by releasing a bill and voting in the committee.

At least for the moment, large companies are united around lowering the 35% corporate-tax rate and lightening U.S. taxes on companies' foreign income. Both features make the U.S. an outlier among developed nations, which have lowered tax rates and adopted so-called territorial tax systems that generally don't reach outside their own borders.

The challenge will come as Mr. Brady and other Republicans try to make up the revenue lost from those changes. Mr. Brady said Tuesday that he still wants to limit companies' ability to deduct interest, an idea that has drawn opposition from parts of the real-estate, finance and agriculture industries.

Companies such as UPS, which is part of a coalition emphasizing corporate-rate reduction, report relatively few federal tax breaks and would likely come out ahead from most forms of a rate-lowering, base-broadening change. Technology companies and pharmaceutical firms, which have prospered in part by booking profits in low-tax foreign countries, have more to lose.

"We think it's the best opportunity and we're going to do everything we can to get it passed," Mr. Abney said.

Write to Richard Rubin at

(END) Dow Jones Newswires

August 22, 2017 18:48 ET (22:48 GMT)