Apr 20, 2021 - Politics & Policy

Corporate America finds downside to politics

Illustration of a man's dress shoe hovering above shark-filled water

Illustration: Annelise Capossela/Axios

Corporate America is finding it can get messy when it steps into politics.

Why it matters: Urged on by shareholders, employees and its own company creeds, Big Business is taking increasing stands on controversial political issues during recent months — and now it's beginning to see the fallout.

  • Companies are being criticized by the left, their employees and customers if they don't step up, the right for cutting off insurrectionists and being "too woke," and the left again if they withhold opinions on even more political flashpoints.

Republicans also find themselves in a mess of their own making.

  • While they chastise and threaten the companies that have cut off political donations after the Jan. 6 Capitol assault, they're leading the charge against the Democrats' efforts to hike the corporate tax rate to pay for President Biden's $2.2 trillion infrastructure package.

The bottom line: Controversy is "a cost of doing business" these days, according to Doug Pinkham, the president of the Public Affairs Council.

  • "You have to assume that you're going to get embroiled in a controversy just by staying involved in the issue," Pinkham told Axios. "And then it becomes a discussion about, you know, if we don't get involved in this issue, will we be embroiled in a very different controversy?"
  • The American Conservative Union criticized Delta Air Lines for its competing statements on the Georgia voting law.

Driving the news: The tensions between Washington and Corporate America hit a boiling point this month as backlash over Georgia's imposition of voting restrictions intensified.

  • Major League Baseball decided it would no longer host the All-Star Game in Atlanta, while Georgia-based Delta and Coca-Cola called the law unacceptable and at odds with their company values.
  • Senate Minority Leader Mitch McConnell (R-Ky.) threatened “serious consequences” and warned companies "to stay out of politics." He later backed off those remarks but made clear he didn't think they were fairly representing political reality.
  • High-profile Senate candidate and “Hillbilly Elegy” author J.D. Vance then publicly suggested raising taxes on such "woke" companies.

Yes, but: Republican fury with Corporate America is not translating, so far, into a meaningful change in the standard Republican position on a major issue of the day: tax policy.

  • Sen. Rick Scott (R-Fla.), chairman of the National Republican Senatorial Committee, told Axios on Tuesday he doesn’t think his frustration with many of these corporations will prevent him from opposing tax hikes. The interview followed his "open letter" to "Woke Corporate America" on Monday, which warned of a "day of reckoning."
  • Sen. Mitt Romney (R-Utah), who told Biden on Monday he’s opposed to increasing the corporate tax hikes, separately told Axios: “We have a long history as a party, and as individuals, in working with various enterprises in our respective states, and I think they know where we stand."
  • Neil Bradley, chief policy officer at the U.S. Chamber of Commerce, said: "I wouldn't expect that they would suddenly change their view about what's best for the country because of disagreements on unrelated issues."

What's next: Republicans largely see the corporate tax rate as a tax on others — investors, pensioners and customers. But there are a ton of other ways they can get even with companies that have taken them to task.

  • Airlines rely on the government for tax treatment, route approval and infrastructure near their facilities. Manufacturers for trade policy. Shippers for tariff treatment. Revenge can come in many forms, deep inside legislation.
  • "The level of political sophistication for Fortune 500 companies is going to have to increase exponentially here and quickly," said a GOP consultant who advises large firms in D.C.
  • "The business community writ large is probably two to four years from being in the same position as the tech industry," the consultant added, referring to recent bipartisan backlash against Silicon Valley. "The Rob Portmans are retiring. You're going to have more Josh Hawleys."
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