Five Tips for Trump Treasury Transition From Past Officials

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By Allyson Versprille

Nov. 22 — Members of Donald Trump’s Treasury transition group have their work cut out for them when it comes to building the new administrative tax team.

Both the president-elect and Republican members of the House and Senate have expressed a desire to pass a comprehensive tax overhaul in Trump’s first 100 days in office.

But as several former Treasury Department officials told Bloomberg BNA, that isn’t an easy task, even with Republicans controlling Congress and the White House. The transition team will need to quickly fill top positions, including Treasury secretary and assistant secretary for tax policy.

Former officials offered advice to the Trump team on how to make the transition smoother and more effective.

1. Take Swift Action

One of the primary challenges for new tax policy leaders will be getting up to speed on existing efforts as the House plows forward with its “ A Better Way” proposal introduced earlier this year. The transition team will need to find top-level officials who can enter the Office of Tax Policy and immediately dive into tax overhaul conversations.

“There’s a lot of pent-up desire, particularly on the House side, to move fast on tax reform,” said Gregory F. Jenner, a partner in the tax practice group at Stoel Rives LLP.

“You have the blueprint. You have the Camp plan,” he said, referring the Tax Reform Act of 2014 introduced by former Ways and Means Committee Chairman Dave Camp (R-Mich.). “There’s a lot of stored momentum,” said Jenner, who served as both acting assistant secretary for tax policy at Treasury in 2004 and deputy assistant secretary for tax policy from 2002 to 2004.

“On the other hand, you have the administration coming in and playing catch-up,” he said. “Effectively grabbing control, or if not control at least making sure that their voice is heard in the tax reform process,” is going to be a hurdle, said Jenner, who also served as tax counsel for the Senate Finance Committee from 1985 to 1989 and worked on the Tax Reform Act of 1986.

There are aspects of Trump’s plan that differ from the House proposal, though it moved into closer alignment with the House blueprint during the campaign process. The existing differences include tax rates—Trump has proposed lowering the corporate tax rate to 15 percent compared with the House’s proposed 20 percent rate. Trump would also change the taxation of carried interest, treating it as labor income subject to ordinary income tax and payroll tax. The House plan is silent on that issue.

2. Strike a Balance

Perhaps just as important is the necessity to make sure the leadership team at Treasury—particularly in the Office of Tax Policy—strikes a balance between broader-level thinking and technical tax expertise, said Lisa M. Zarlenga, a partner at Steptoe & Johnson LLP.

Most of the individuals being considered for the Treasury secretary position, such as former Goldman Sachs Group Inc. partner Steven Mnuchin, come from a financial services background as opposed to a tax background, said Zarlenga, who served as tax legislative counsel at the Treasury’s Office of Tax Policy from 2011 to 2015.

That isn’t necessarily a problem or even surprising, she said. The positions that will be more crucial for the future of tax policy are the assistant and deputy assistant secretary for tax policy roles, which haven’t received much attention up to this point, she said.

“In the past, that top tax spot has usually been held by a tax lawyer,” Zarlenga said. However, the current assistant secretary, Mark J. Mazur, is an economist, a trend that Zarlenga said she expects Trump to continue because his team has “been relying a lot on economists for their tax policy plans.”

If that is the case, she recommended that the deputy assistant secretary have a more traditional tax attorney background, “especially since they’re looking to do serious tax reform.”

Trump hasn’t chosen any top Treasury posts, though he did announce a Treasury landing team on Nov. 21 that includes Curtis Dubay, formerly a tax and economic policy research fellow at the Heritage Foundation. Earlier, he was a senior associate at PricewaterhouseCoopers LLP and an economist at the Tax Foundation. Eileen O’Connor of the Law Office of Eileen J. O’Connor PLLC, who was added to the team Nov. 22, also has a tax background, representing clients in connection with civil and criminal federal tax disputes. She served as assistant attorney general for the Justice Department’s Tax Division from 2001 to 2007, and before that she worked as a corporate tax law specialist at the IRS.

Others on the Treasury landing team include William Walton, founder and chairman of Rappahannock Ventures LLC; Judy Shelton, an economist and co-director of the Sound Money Project at the nonprofit organization Atlas Network; and Mauricio Claver-Carone, executive director of the Washington-based Cuba Democracy Advocates.

While assigning a Treasury landing team “doesn’t necessarily signal how the Trump administration might function in the tax area,” it does signal some progress, Zarlenga said, especially with rumors swirling that the Trump transition team is slightly behind schedule.

The Trump transition team and Treasury didn’t respond to requests for comment.

3. Look for Hill Experience

Leaders in the Office of Tax Policy have to not only understand tax law, but the office also needs someone with a strong understanding of the legislative process, Pamela Olson, the U.S. deputy tax leader and Washington National Tax Services practice leader at PricewaterhouseCoopers, told Bloomberg BNA.

It is necessary to have a person in that position who can grasp “the art of getting a bill enacted,” said Olson, who served as assistant secretary for tax policy from 2001 to 2004.

Bipartisan support will be necessary to achieve comprehensive tax overhaul, Zarlenga said. Getting “somebody that’s able to maneuver the politics of the Hill and work with people on the Hill, I think will be a positive.”

There have been discussions about getting a large tax package passed through reconciliation, a procedural pathway that would limit Senate Democrats’ ability to block Republican legislation and enable passage with a mere majority.

Michael F. Mundaca, co-director of the National Tax Department and the Americas Tax Center at Ernst & Young LLP, said understanding the politics and mechanics of reconciliation are important for an incoming high-level tax official. “It’s difficult to do fundamental reform through reconciliation,” he said. Mundaca, who served as assistant secretary for tax policy in the Obama administration before rejoining Ernst & Young in 2011, also served in the Treasury Department in various roles under former Presidents Bill Clinton and George W. Bush.

He noted, however, that some tax changes are possible through a reconciliation effort, pointing to the large cuts President Bush enacted in the Economic Growth and Tax Relief Reconciliation Act of 2001. The Obama-to-Trump transition has been compared to the Clinton-to-Bush transition.

If the person who fills the top tax position at Treasury comes in and determines that bipartisan support for a fundamental change is unlikely, the administration and Congress may want to consider pushing through an alternative package in reconciliation that includes tax changes on the same level as the Bush act, Mundaca said.

4. Rethink Lobbying Ban

Trump’s transition team announced last week that registered lobbyists won’t be allowed to serve in the Trump administration, and those individuals who leave the administration must wait five years before becoming lobbyists. Individuals who join Trump’s team will be asked to sign a lobbying ban form verifying they aren’t a registered lobbyist, and those who are will have to provide evidence of their termination.

Zarlenga said the lobbying ban, especially the five-year limitation after leaving the government, could prove to be a significant hurdle for the Trump transition team as it looks to fill the top positions in the Office of Tax Policy. “A lot of people in Washington have lobbied,” she said. “They’re not lobbyists per se, but a lot of law firms do lobbying.”

The five-year ban will limit the eligible talent pool to individuals who are close to retirement or tax professors, she said.

President Barack Obama imposed a two-year lobbying ban for officials who left his administration, instituted by executive order on his first day in office. And “when it came to trying to fill the position of assistant secretary, it was tough. He was pretty much limited in the beginning to professors,” Zarlenga said.

Olson agreed. “What you’re doing when you say, ‘No lobbyists,’ is you’re taking out of the pool of candidates the people who are probably best informed and care the most about policy.”

5. Reach Out to Current and Former Staff

The past officials said Trump’s transition team shouldn’t hesitate to take advantage of the knowledge of current and former staff at the Office of Tax Policy.

“The best advice that I could give to anybody walking into that office, particularly transitioning from one administration to another, is talk to the people who have been there before—find out what works, find out what doesn’t work,” Jenner said.

“It doesn’t matter which party those individuals were a part of, they’re there to help,” he said. “All of us, I think without exception, are interested in furthering good tax policy, and therefore a Republican administration should feel free to pick up the phone and talk to their predecessor—both Republican and Democrat,” Jenner said.

The Trump team should also realize that the majority of the Office of Tax Policy staff—as much as 75 percent to 80 percent—are either permanent economists or quasi-permanent tax attorneys and administrative staff that have been involved in prior transitions, Jenner said. The attorneys are “quasi-permanent” because—although they aren’t political appointees—they typically only remain in the office for three to four years and then rotate back into the private sector, he said. The incoming administration should rely on those individuals and trust that they will guide them, Jenner said.

“The hardest thing for the team coming in is to realize” that those people are there to assist with a smooth transition, Mundaca said. “They may think that there’s a level of animosity that behooves a level of distrust,” but that is rarely the case, even during the controversial Clinton-to-Bush transition, he said of his experiences. The 2000 election culminated with a contentious U.S Supreme Court decision in Bush v. Gore that ended recounts in Florida, effectively granting Bush the victory. In the end, Al Gore won the popular vote, while Bush won the electoral vote—similar to Trump’s victory.

Jenner said he doesn’t envision that tensions spilling over from the election or people’s personal views on Trump will cause a significant portion of current staff to leave or hinder the transition team’s efforts to appoint new leaders.

“Any sort of reticence on the part of folks who would otherwise be concerned” will likely be overcome by the desire to work on a fundamental tax overhaul, he said. “It’s something that may be—for lack of a better term—like catnip to somebody who’s interested in tax policy.”

To contact the reporter on this story: Allyson Versprille in Washington at

To contact the editor responsible for this story: Meg Shreve at

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