WASHINGTON (Reuters) – The U.S. Treasury announced several hires to top posts on Wednesday, and sources said the new officials plan to push a key part of President Joe Biden’s economic agenda: ramping up tax enforcement and regulation at home and overseas.
FILE PHOTO: U.S. President Joe Biden signs executive orders on immigration reform inside the Oval Office at the White House in Washington, U.S., February 2, 2021. REUTERS/Tom Brenner
Treasury Secretary Janet Yellen added a clutch of former Obama administration officials to her leadership circle who have extensive tax, legal and international economics backgrounds.
Former International Monetary Fund official David Lipton will serve as a senior counselor to Yellen, an appointment first reported by Reuters on Tuesday.
He will be joined by Itai Grinberg and Tom West, whose backgrounds are in tax policy, and Federal Reserve lawyer Laurie Schaffer.
Yellen is expected to push for broad changes to global tax enforcement and regulation, with the personal blessing of Biden, a person with direct knowledge of the matter. Biden is seeking sharper enforcement of existing laws to reduce income inequality and to pay for spending proposals, the person said.
The Treasury Department said that in calls with foreign ministers from the allied United Kingdom, Germany, France and Italy since her swearing in, Yellen has discussed tax issues, including finding ways to “efficiently and equitably” tax multinational companies’ income.
She also pledged to rejoin Organisation for Economic Cooperation and Development negotiations on taxing large multinational technology services companies such as Facebook Inc and Google that her predecessor, Steven Mnuchin, had abandoned.
Over a dozen countries have imposed unilateral taxes on such digital services. Biden has argued that large tech companies sometimes shoulder too small a tax burden.
His administration is also considering new guidance to the Internal Revenue Service, sanctions targeting tax havens and synchronizing the U.S. tax approach with other countries, according to the person familiar with the matter.
The new hires can be expected to help the Democratic president fulfill his pledge to unwind previous President Donald Trump’s tax legacy, which included slashing corporate taxes and reducing enforcement.
Treasury and White House spokespersons did not immediately respond to requests for more details on the administration’s tax strategy.
The Internal Revenue Service in 2019 estimated that the average annual gross tax gap – the difference between taxes legally owed and those collected – averaged $441 billion for the tax years 2011 through 2013, largely through underreporting of individual, payroll and corporate income.
The tax act passed by Trump and Republicans in late 2017 slashed corporate taxes by 40%, and the reduced revenue contributed to a wider federal deficit.
The tax team is being built up more quickly than other areas of Treasury.
Lipton, who was the No. 2 official at the IMF for over eight years, and led the institution’s policy development, is expected to assist Yellen with outreach to U.S. allies on economic policy matters and coordination of G20 and G7 finance meetings and summits, people familiar with his appointment said.
West, a tax adviser at the auditing company KPMG International Ltd who spent five years in the Treasury Office of Tax Policy under former President Barack Obama, will return to as deputy assistant Secretary for domestic business tax, Treasury said.
Grinberg, who served in international tax roles during the George W. Bush and Obama administrations, is returning to Treasury as deputy assistant secretary for multilateral tax in the Office of Tax Policy, after a decade as a Georgetown Law School professor.
Schaffer, a Federal Reserve Board deputy general counsel, would return to Treasury as principal deputy general counsel, the department said. Schaffer had been Treasury assistant general counsel for banking and finance from 2008-2011.
Treasury also named Fordham University tax law professor Rebecca Kysar as counselor to the assistant secretary of tax policy. An expert on international tax law, Kysar helped Biden’s transition team review tax policy and the Treasury department.
Reporting by Trevor Hunnicutt and David Lawder; Additional reporting by Andrea Shalal; Editing by Dan Burns, Heather Timmons and David Gregorio