House Republican support grows for corporate tax increase, threatening key part of Trump’s economic legacy

The growing opposition reflects how much the US fiscal picture has changed since Trump’s tax cuts were enacted in 2017. The national debt has soared to $34 trillion, inflation has become a stubborn feature of the US economy, and the Federal Reserve has rapidly raised interest rates to stamp out high prices, rendering interest payments on the debt near a record high.

Next year’s tax battle amounts to a $4.5 trillion clash. The law’s individual tax cuts are all scheduled to sunset, including its rate reductions, the larger standard deduction, and a bigger Child Tax Credit. So are its lucrative tax breaks for pass-through business owners, like sole proprietorships, and its rollback of the estate tax.

But large companies face a more hostile environment in Congress, with Democrats seeking to increase corporate tax rates and Republicans clashing with corporate America on a range of social issues like reproductive rights.

“The old kind of a Wall Street Journal editorial page view of the world is not necessarily the view of a lot of Republican members of Congress,” Peter Roskam, a GOP architect of the 2017 tax law who’s now a partner at the BakerHostetler law firm, told Semafor. “You’ve got members now positing the urgency of these debt questions, and at the same time saying ‘Hey, why is it that we’re holding a candlelight vigil for these corporations with whom we’re adverse on so many of these things?’”

In particular, one prominent conservative with influence on Capitol Hill — and a regular interviewer of GOP lawmakers on his daily TV program, including Roy — has recently prodded Republicans to reevaluate their reflexive opposition to corporate tax increases.

“Corporations that march to the beat of the Left’s social policy drum need to stop looking to Republicans to rescue them from the Left’s tax policy,” Tony Perkins, president of the Family Research Council, posted on X last week. “Let corporate America be burdened with the Left’s tax policies just like our families have been burdened with their social policies.”

Roy further elaborated on his views recently on Perkins’ program. “I’m tired of corporations taking this for granted, tired of corporations going and taking subsidies to go out and enrich themselves whether it’s Obamacare insurance subsidies, or the Inflation Reduction Act, so-called subsidies for the energy policies,” he said. “I want us to use the leverage to force corporations to start being America-first, centered on making sure they’re delivering products.”

Most Republicans still adhere to the pro-business views that’s governed their party for decades. Or as Oren Cass, executive director of American Compass, put it to me: “There are still a lot of Paul Ryan Republicans from the pre-Trump era still walking around with their dog-eared Reagan playbooks.”

But the rupture between Corporate America and Republicans has at least a few of them toying with tax increases, in a possible sign the party is less ideologically moored than it used to be. A small rebellious faction of Republicans only complicates Trump’s agenda if they regain both chambers of Congress with a narrow House majority. Moody’s Analytics puts that clean sweep scenario at 35% (though that was before Biden’s disastrous debate that left Republicans brushing off their reconciliation handbooks).

Most observers, though, are preparing for a GOP-led Senate and a Democratic-led House to rewrite swaths of the tax code in difficult negotiations. “I’m convinced that members of Congress are going to be asked to make miserable choices,” Roskam told me.

Traditional conservatives are re-emphasizing their opposition to corporate tax increases. “Trump has been crystal clear about that, and the Republican leadership has been crystal clear about that in the House and Senate,” Grover Norquist, president of the conservative Americans for Tax Reform, told Semafor. “This is not happening.”