(Bloomberg) In a media blitz last October, the billionaire investor Carl Icahn pledged to create a $150 million political organization to muscle an overhaul of the corporate tax code through a gridlocked Congress.
After a flurry of calls with top lawmakers in both parties, he said he was optimistic a bill could pass within weeks. In an interview on CNN, he called his proposal "a no brainer."
Five months and a few setbacks later, Icahn says he remains committed to rewriting the tax code, but acknowledges the work will be more low-key and difficult than he first supposed. Gone is the headline-grabbing idea of a $150 million super political action committee, or super-PAC. He'll still spend some money to pursue his goal—probably less than $150 million—but he won't specify how much, or on what.
"It's going to be a slow slog to get this done," Icahn said in an interview Thursday.
Icahn, a Queens native who amassed a $21 billion fortune by shaking up dysfunctional corporate boards, may be up against an organization that even he can't spur into action. "If anything, I underestimated how bad the gridlock in Washington is. Here, you have everybody agreeing it should be done, and you can't get anything out on the floor."
Icahn said he's scrapped one of his early ideas of trying to spark a grassroots movement to pressure Congress on corporate tax reform. "We tried a little of it and we didn't get much response," he said, declining to elaborate on the form this experiment took. "You would think this is simple, but it's hard to get somebody all revved up about it."
Icahn said he's increasingly resigned to the fact that lawmakers won't take up the issue until next year, and so he's turned some of his attention to Congressional races. He plans to buy some full-page newspaper ads, including one coming soon in a competitive Senate contest. (He wouldn't identify the race, but one of the two senators he's singled out for praise in the recent past, the Ohio Republican Rob Portman, is facing a stiff re-election fight.) He's also working the phones behind the scenes to get lawmakers and candidates interested in the issue.
Meanwhile, Icahn said, he's dropped the idea of forming a super-PAC, because he can spend the money directly without the hassle of registering with the Federal Election Commission. Without a super-PAC, Icahn won't be able to raise money from other donors, as he had said last year he might do. Some of his spending will still be disclosed to the FEC, he said.
At issue is the U.S.'s international corporate tax system—how the government taxes American companies on profits they earn abroad. Under the current rules, corporations must pay as much as the 35 percent corporate tax rate, the highest in the developed world, on profits they collect from overseas subsidiaries. That gives companies an incentive to stockpile their earnings abroad indefinitely. Some companies have found a workaround known as an inversion, in which they transform into a foreign company to permanently escape the most onerous parts of the U.S. tax system. The drugmaker Pfizer is among the latest big companies to attempt such a move.
Icahn is a vocal supporter of Donald Trump, the front-runner for the Republican presidential nomination, who has repeatedly talked about the inversion problem on the campaign trail. Last year, Trump floated the idea of appointing Icahn his Treasury secretary, a post Icahn has said doesn't interest him.
When he announced his tax crusade last year, Icahn didn't hide the fact that, as one of the largest shareholders of Apple Inc., he stood to profit personally from a change in policy. Apple has one of the country's largest stockpiles of foreign earnings, and it could save billions of dollars if the tax on those earnings was lowered or eliminated. Securities filings show that Icahn sold some of his Apple stake in the fourth quarter, but he still owned $4.8 billion worth of the company as of Dec. 31. Icahn declined to comment on whether he's sold any more since then.
When Icahn, a political neophyte, began laying his plans last fall, he reached out to some of the top Washington hands in both parties for advice: Karl Rove, the architect of George W. Bush's presidential races; Newt Gringrich, the former House speaker; and Jim Messina, who managed President Barack Obama's re-election campaign. But as he often has with his business ventures, Icahn said, he decided not to rely much on outside advice, and is directing much of the political work himself.
During a conference call with Messina, the Democratic operative had a warning for Icahn, according to a person with knowledge of the conversation. As long as Icahn was associated with Trump, there was little hope of getting the cooperation of Congressional Democrats for a bipartisan initiative, Messina told them.
Reached by phone, Messina declined to comment on the conversation. Icahn also wouldn't discuss it, but he added, "I've been talking to a lot of Democrats who agree with me completely."
Icahn's original aim in Washington was to get Congress to take up international tax changes when it considered a must-pass highway bill last fall. Portman and Senator Charles Schumer, a New York Democrat, had sponsored a proposal that addressed the issue. But the highway bill became law in December without including the proposal.
Around the same time, Icahn said, he suffered another setback when Paul Ryan, an advocate for corporate tax reform, left the tax-writing House Ways and Means Committee to become House speaker. Icahn says the new chairman, Kevin Brady, is a "good guy," but that the transition has delayed progress on the issue.
"Once the dust settles after November, this will be accomplished," Icahn said. Then he said he had to go—a senator was on the other line.
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