WASHINGTON – In the first six months of 2017, Best Buy spent $1.71 million lobbying, twice as much as it spent the entire year in 2016. Target Corp. spent $1.48 million lobbying from January through June 2017, only slightly less than it spent all of last year.
The numbers, drawn from government records, show the Minnesota companies' determination to kill a border adjustment tax on imports that House Republicans made a centerpiece of their Better Way tax reform plan.
In a memorable bout of political muscle-flexing, the nation's retail industry "took a $5 trillion tax hike [over 10 years] and defeated it with a few million dollars worth of advocacy expenditures," said David French, vice president of government relations for the National Retail Federation (NRF), which spent $7.3 million lobbying in the first six months of 2017, more than it did in all of 2016.
On July 27, Speaker of the House Paul Ryan, R-Wis., and Senate Majority Leader Mitch McConnell, R-Ky., joined Trump administration officials to announce that they had "set aside" the border adjustment tax to concentrate on other kinds of tax reforms.
"Interest groups now play a much more important role in determining what is and is not on the agenda," said Steve Billet, a former AT&T lobbyist now teaching at George Washington University. Still, Billet said he was surprised at "the willingness of the Speaker to roll over on this. … This was an important component of tax reform that he gave up fast."
Border adjustment would require American importers to pay taxes on the sales of their foreign-made inventory, but would not allow them to deduct the cost of that inventory. This would increase what American companies must pay the government on imports by up to 20 percent. Meanwhile, the GOP plan would not tax U.S. companies' earnings on exports.
Buy American?
Some Republicans touted the border adjustment tax as a buy-American initiative and a revenue replacement plan that would allow them to cut the U.S. corporate tax rate from 35 percent to 15 or 20 percent. Because Target imports a "large portion" of its merchandise and because the majority of the electronics Best Buy sells are made abroad, both companies faced potentially ruinous hits to their bottom lines or equally ugly price increases to their customers under the plan.
Asked about Target's sharp increase in lobbying expenditures, a spokeswoman said that "in recent months our primary focus has been tax reform."