Business leaders may be uncomfortable with the autocratic lurch of the Republican party, but these traditional allies seem to be reuniting in response to a common threat: President Biden and his plan to raise taxes.
After the Jan. 6 takeover of the U.S. Capitol, some businesses said they would halt donations to Republicans who egged on rioters or tried to block Biden from taking office. Republican efforts to restrict voting in Georgia, Texas, Florida, Michigan and other states have now prompted dozens of CEOs to brainstorm ways they can countermand GOP bills and protect voting rights.
But profits trump conscience, and the business lobby is now aligning with Republicans who oppose Biden’s plan to raise the corporate tax rate—and hope it will help them flip control of Congress back to Republicans in the 2022 midterm elections. Top business groups, including the Business Roundtable, the US Chamber of Commerce and the National Association of Manufacturers, are running ads against the Biden plan in the districts of vulnerable Democrats, with the implicit message that supporting the Biden tax hikes could generate well-funded political opposition in 2022 and possibly cost Democrats control of the House or Senate, or both.
The campaign “is not aimed at changing the minds of voters, who right now support tax increases on the wealthy and corporations,” Beacon Policy Advisors explained in an April 13 analysis. “It’s to target moderate Democrats directly to say this will be a politically costly vote for them.”
Biden wants to raise the business tax rate from 21% to 28% to help pay for infrastructure and social-welfare spending in his American Jobs Plan, which Congress is drafting now. The top business rate was 35% until Republicans lowered it to 21% in the tax-cut law that passed in 2017, with no Democratic support. A recent Morning Consult poll found that 54% of voters favor tax hikes to pay for infrastructure, with only 6% opposing.
The vulnerability for Democrats comes from their razor-thin majorities in Congress—just one seat in the Senate and four seats in the House. There’s already a good chance Republicans will retake the House, if only because the president’s party typically loses ground in the midterm elections. Republicans are defending more open seats than Democrats in the Senate, but they could still benefit from a snapback against Democrats. The implicit message from the business lobby is that it will target the most vulnerable Democrats—such as those in relatively conservative districts—with generous financial support for Republican opponents.
The Business Roundtable, US Chamber and NAM represent many of the biggest companies in the nation. It’s their job to lobby for whatever is in the best interest of their member companies, and big businesses undoubtedly benefit from lower taxes. But aggressively opposing Biden’s plan firmly aligns corporate America with the GOP, or rather, reaffirms the alliance. It was a stretch to think big business would turn on the party that, no matter how ugly its anti-democratic leanings, has their back.
That doesn’t mean the business lobby will get its way. It’s plausible Congress could pass the business tax hikes later this year, with Democrats holding onto their majorities in 2022. The economy will likely be strong by then, leaving voters no obvious reason to vote out the party in power. Voters may give Biden credit for ending the coronavirus pandemic, and populist Biden programs such as an enlarged child tax credit and more generous health care subsidies could make the midterms a winner for Democrats.
The business lobby could be bluffing, too. There’s a good chance Congress raises the corporate tax rate not to 28%, but to something less, such as 25%. Most CEOs won’t say so outright, but that would be a minor hit to profits most companies could easily adjust to. If that’s where it ends up, some of that corporate money might just stay on the sidelines in 2022, as businesses tacitly make peace with Democrats. That could be a better outcome than funding Republicans and then having to answer for the offenses they commit if they regain power.
Rick Newman is the author of four books, including "Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. You can also send confidential tips, and click here to get Rick’s stories by email.