The CEO of Lowe’s Cos. says the fees that banks charge stores when customers use debit cards are among the top political issues facing the Mooresville-based home-improvement retailer, according to an internal memo obtained by the Observer.
In his letter to employees, Robert Niblock highlights the so-called swipe fees, which were capped by the Dodd-Frank financial overhaul law. The future of that cap, though, is uncertain as Republican lawmakers push to replace the 2010 law under President Donald Trump.
Many retailers are troubled by a possible loss of the cap, which they worry would increase their costs. Lowe’s says removal of the cap could mean higher prices for its products.
Niblock’s March letter also mentions the potential taxing of imports to the U.S., a plan proposed by Republican leaders in Congress. Some retailers, including Lowe’s, have said the tax could force them to raise prices for consumers.
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With a new administration in the White House and a new Congress, the internal Lowe’s document provides a window into how one Charlotte-area company is engaging its managers in efforts to influence U.S. policy.
The two issues are included in the letter to “targeted U.S. managers and above” that urges them to become involved with Lowe’s political action committee, LOWPAC. The retailer’s PAC, like those for other companies, spends money voluntarily donated from employees to back candidates seen as supportive of those firms’ interests.
“The election year is over but our work is not done – in fact it has just begun,” Niblock’s letter says.
“The 2016 elections resulted in a large number of newcomers, 6 in the U.S. Senate and 20 in the House of Representatives,” the letter says. “These fresh faces provide us with an opportunity: the chance to educate about our issues and create winning coalitions.”
“Issues that affect us, such as the cap on swipe fees and the proposed border adjustment tax, will be decided with this new Congress. We cannot sit on the sidelines and wait for someone else to decide what those changes will be.”
Retailers worried about the future of swipe fees are closely watching one piece of legislation in particular, the Financial Choice Act, which is winding its way through Congress. The bill, introduced by committee chairman Jeb Hensarling, R-Texas, would among other things eliminate a Dodd-Frank provision known as the Durbin amendment that capped swipe fees.
Supporters of ending the cap, such as Americans for Tax Reform, say the hope was the ceiling would lead to cost savings for retailers that would be passed on to consumers. Those critics contend consumers have not seen such savings.
In an Observer interview this week, Chris Ahearn, vice president of public affairs for Lowe’s, said removing the cap could mean Lowe’s would have to pass higher swipe fees on to customers: “Our position is that there should be a cap on the fees.”
The proposed tax on imports, a so-called border-adjustment tax, is part of a tax-code rewrite championed by House Speaker Paul Ryan to replace the 35 percent corporate income tax with a 20 percent tax on U.S. companies’ domestic sales and imports. President Donald Trump hasn’t endorsed the concept, which has been strongly opposed by retailers, carmakers and other businesses that rely on imported goods.
Ahearn said the border tax could also result in higher prices for customers on some Lowe’s products. The average annual impact on a Lowe’s customer would be about $1,700, she said.
In one example, she cited refrigerators sold at Lowe’s that might contain parts made in other countries. With a border tax, the manufacturer of those refrigerators would charge Lowe’s higher prices to cover the tax affecting those parts, Ahearn said.
“We believe that that tax would create an unfair burden on consumers,” Ahearn said. “That’s why we’re opposing that.”
Ahearn declined to provide an estimate for the combined financial impact to Lowe’s from the border tax and eliminating the swipe fee cap, noting both measures are proposals that could still be changed.
During the 2016 election cycle, Lowe’s political action committee contributed $448,750 to federal candidates, with 87 percent of the funding going to Republicans, according to the Center for Responsive Politics. That compared with $280,000 in 2012, when 79 percent went to Republicans. The 2016 data doesn’t list any contributions for Trump or Democratic challenger Hillary Clinton, only those to House and Senate candidates.
In his letter, Niblock writes that Lowe’s PAC, “gives Lowe’s a bigger voice on Capitol Hill” and that “you can be part of this effort to make a change by joining LOWPAC.”
Niblock, a registered Republican, contributed about $9,600 to Lowe’s political action committee over 2015 and 2016, according to Federal Election Commission data. The data doesn’t show any Niblock donations for presidential candidates during the last election, though in 2012 he contributed to Republican Mitt Romney’s failed presidential run.
Under federal regulations, it is illegal for companies themselves to give to political campaigns. But it is not unusual for companies to nudge employees to give to their PACs.
Eric Heberlig, political science professor at UNC Charlotte, said Niblock’s letter sounds like a common pitch from companies seeking PAC contributions. While it’s illegal for companies to give money from the corporate treasury to PACs, they face no limits on how much they can spend prodding their employees to donate, Heberlig said.
“This is another aspect of campaign finance law that people don’t know about,” he said. “That’s always been an alternative avenue for corporate influence that’s hard for us to measure.”