Paul L. Caron

Saturday, February 6, 2021

Reactions To Tax Prof Appointments To Biden's Treasury Department

Following up on Wednesday's posts:

Revolving Door Project, Biden's Newest Treasury Tax Appointees Delight and Disappoint:

Some mixed news for progressive tax enthusiasts: Joe Biden’s administration has chosen both a committed progressive tax advocate and a Republican career expert in corporate tax avoidance for its first two appointees to the Treasury’s Office of Tax Policy. We’re now in a strange situation where experts who testified on opposite sides of the 2017 Tax Cuts and Jobs Act will now serve shoulder-to-shoulder.

On Monday, Kimberly Clausing, the Eric M. Zolt Chair in Tax Law and Policy at UCLA Law, was sworn in as the Office’s Deputy Assistant Secretary for Tax Analysis.

Clausing’s appointment is an undeniable win for progressives. Clausing is a renowned expert in international corporate taxation and has long been a proponent of reforming tax laws to prevent base erosion — the practice in which businesses reduce the tax base by lowering their domestic corporate profits — and profit-shifting overseas. During the 2017 debates over tax reform, Clausing testified before Congress on the need for more progressive taxation and preserving corporate income tax rates above those on individual income. At Treasury, Clausing will undoubtedly continue to reliably support tax reforms to capture missed revenue due to corporate tax avoidance strategies. ...

In a more confounding move, the Biden Treasury Department also added Itai Grinberg to its ranks as Deputy Assistant Secretary for Multilateral Tax in the Office of Tax Policy. 

Grinberg has a long history of promoting tax policy that benefits big corporations. In the early 2000s, before his first stint in government under Republican George W. Bush, Grinberg advised corporations on tax law and policy at BigLaw firm Skadden Arps. In 2005, President Bush appointed him to serve as counsel to his Panel on Tax Reform, which ultimately proposed lowering the tax rates on long-term capital gains and corporate income and replacing the earned income tax credit with a less generous “Work Credit.”

Grinberg was a key Republican proponent for numerous components of Trump’s 2017 tax cut bill. ...

As corporations enrich themselves during the pandemic, it is vital that Biden’s Treasury Department take a firm stance against tax avoidance and evasion both at home and abroad. When making hiring selections, the Biden administration must ask itself whether its nominees are ready and willing to work on behalf of the American people and ensure that corporations pay their fair share. Clausing easily passes that test. Grinberg comes nowhere near. 

Tax Foundation, Personnel Is Policy: Biden International Tax Team Edition:

This week, the Treasury Department added several new appointees as staffing continues following President Biden’s inauguration. Among them were three scholars of international tax policy: economist Kimberly Clausing and law professors Rebecca Kysar and Itai Grinberg. These three will be influential in developing the administration’s approach to changing U.S. tax rules for multinational corporations and negotiating international tax policy changes at the Organisation for Economic Co-operation and Development (OECD). ...

In September, the Biden campaign released a plan to change U.S. tax rules for multinationals in several ways. The proposals include increasing the tax rate on GILTI to 21 percent (from the current minimum of 10.5 percent), removing a deduction for qualified business asset investment (QBAI), and taxing GILTI on a country-by-country basis. The campaign also proposed a new 10 percent surtax on certain offshore activities of U.S. companies.

Clausing, Kysar, and Grinberg will have influence over how these proposals develop. Clausing has argued in favor of a global minimum tax which would be much broader than GILTI, and both Kysar and Grinberg have pointed out the flaws of GILTI and other aspects of TCJA’s international rules.

International Tax Review, Yellen Picks Notable Experts to Join the US Treasury’s Digital Tax Talks:

In-house tax directors at large multinational companies and their advisors are expecting revisions to certain measures under the TCJA, including increasing the corporate tax rate and global intangible low-taxed income (GILTI) rate, following key appointments to the US Treasury. Faster developments on pillar one and two at the OECD are also expected. ...

“This is a big deal, it’s like Janet Yellen actually means business by building up the tax team more quickly than other areas of the Treasury,” said one vice president of global taxes at a US multinational consumer goods company involved in the OECD discussions. “We should not be surprised with the personnel that are coming in, and yet, it is still impressive.”

Clausing, Grinberg, and Kysar, in particular, bring a significant amount of international tax academic experience, according to Daniel Bunn, vice president of global projects at the Tax Foundation in the US.

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