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The Republican tax reform effort just won some important support

  • Koch groups Freedom Partners and Americans for Prosperity are expected to provide key financial support and political pressure for lawmakers as they return to their home districts next month seeking to demonstrate progress on tax reform.
  • The Koch groups had been among the most vocal opponents of the border adjustment tax.
  • On Thursday, GOP leadership said it would abandon that measure.

Two influential and well-funded conservative groups are publicly throwing their weight behind the Republican effort to revamp the nation's tax code after the White House and GOP leadership on Capitol Hill dropped the controversial border adjustment tax.

Freedom Partners and Americans for Prosperity are holding an event Monday featuring remarks by Treasury Secretary Steven Mnuchin and White House legislative director Marc Short, who previously served as president of Freedom Partners. That will be followed by a speech on Wednesday by Rep. Mark Meadows, R-N.C., leader of the House Freedom Caucus.

The political advocacy groups are affiliated with the libertarian billionaire brothers Charles and David Koch, and they've committed to spending several million dollars to promote the benefits of tax reform focused on simplification and lower rates.

"There is no greater contributor to the rigged economy than the U.S. tax code, and comprehensive tax reform will help un-rig this broken system to the benefit of all Americans," Americans for Prosperity said in a statement.

Charles and David Koch
Miller Hawkins | MSNBC
Charles and David Koch

The Koch groups are expected to provide key financial support and political pressure for lawmakers as they return to their home districts next month seeking to demonstrate progress on one of the centerpieces of the Republican agenda. The groups said they are planning to organize grass-roots events across the country as well as invest in paid ads.

Monday's event will also include volunteers working phone banks to urge lawmakers to pass comprehensive tax reform. On Thursday, Freedom Partners began highlighting 10 senators who previously had supported changes to the tax code, starting with Sen. Joe Manchin of West Virginia. Together, the groups already have spent hundreds of thousands of dollars on digital ads targeting members of the tax-writing committee in the House this summer.

But the Koch groups and Republican leadership have not always been on the same page.

The groups were among the most vocal opponents of the border adjustment tax, which would have allowed U.S. companies to deduct the cost of domestic production but not imports — effectively raising the cost of foreign goods. GOP leadership argued the provision was critical to keeping U.S. companies from moving overseas and also raised a trillion dollars in revenue to help pay for a lower corporate tax rate.

But the Koch groups dubbed the measure a new tax on consumers, even organizing a protest against House Ways and Means Chairman Kevin Brady as he delivered a speech at a Washington hotel. AFP spent six figures on a cable TV ad this spring that compared the measure to the taxes in the Affordable Care Act, while Freedom Partners funded research on the state-level impact of the border adjustment tax.

On Thursday, the Republican leadership announced in a joint statement with the White House that it would abandon the measure to focus on the broader goals of tax reform. Freedom Partners cheered the move as a "welcome step."

Speaking to reporters Thursday, Brady said he planned to retreat next month with members of his committee and the Senate to Rancho del Cielo in California, which served as a vacation home for President Ronald Reagan, to begin work on a tax bill.

"It shows we are uniting behind bold principles of tax reform," Brady said. "It makes clear there is an urgency to deliver it this year, and it's clear the president is fully committed to this tax reform approach."