Mnuchin Tax Counselor May Help Fill Assistant Secretary Void

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By Allyson Versprille

Justin Muzinich—Treasury Secretary Steven Mnuchin’s recently appointed counselor for tax reform—could bring a much-needed focus to tax issues while the department searches for a new assistant secretary for tax policy, former officials said.

“You see people looking at the tea leaves and you don’t see anything that looks imminent at the moment” for the Treasury Department’s assistant secretary for tax policy position or other top leadership roles, said Mark J. Mazur, the most recent assistant secretary for tax policy under former President Barack Obama.

“Given how thin leadership ranks are this is probably a helpful” appointment that could temporarily fill the void, said Lisa M. Zarlenga, a partner at Steptoe & Johnson LLP who was Treasury tax legislative counsel in the Obama administration.

Both former officials said Muzinich—a former Morgan Stanley banker and president of the international investment firm Muzinich & Co.—could provide targeted attention to the government’s tax overhaul efforts, especially since Mnuchin has other issues on his plate.

“As a secretary while you might like to meet with the career staff and discuss tax reform with them, you probably don’t have a lot of hours in the day to do that,” said Mazur, who now works as director of the Urban-Brookings Tax Policy Center. Having a counselor to focus on tax issues offers a way to subcontract that work to someone else, he said.

The White House and Treasury didn’t respond to requests for additional details on the counselor role.

Uncommon Position

Zarlenga said it’s uncommon for a Treasury secretary to appoint counselors, but not unprecedented.

For example, Gene Sperling served as a counselor to then-Treasury Secretary Timothy Geithner during the Obama administration. While he focused primarily on recovery efforts following the financial crisis, he also advised Geithner on budgetary issues, taxes and the Affordable Care Act.

Mazur said these types of positions are less unusual at the beginning of an administration, while a presidential transition is still in its early stages. “It would probably be more unusual if it was two years into the administration.”

Potential Warning Signs

Gregory F. Jenner, who served as both acting assistant secretary for tax policy and deputy assistant secretary for tax policy during the George W. Bush administration, was uneasy that the secretary’s counselor might interfere with the traditional role of the Office of Tax Policy.

“The notion that you would have somebody effectively reporting directly to the secretary overlooking the tax policy function within the Treasury Department is not normal and could be very troubling because it could put a barrier” or filter between the assistant secretary for tax policy and the secretary, said Jenner, a partner at Stoel Rives LLP. It’s more usual that this type of counselor or adviser would report to the assistant secretary, he said.

“The Treasury secretary needs to hear from the tax policy experts and that would be the people in the Office of Tax Policy through the assistant secretary,” Jenner said. “If this counselor role gets in the way of that, that’s not a good thing.”

Michael Desmond, a tax attorney and former Treasury tax legislative counsel during the Bush administration, said this structure does have the potential to create dysfunction if there isn’t a clear understanding of the division of responsibilities. However, it also has the potential to facilitate the future assistant secretary’s work because Muzinich will likely be more accessible than the secretary, he said.

Zarlenga said she doesn’t see the counselor role as supplanting the assistant secretary for tax policy position. Once Congress enacts a tax bill, the assistant secretary will likely oversee implementation, especially since Muzinich seems to have more “big picture” experience than in-depth tax knowledge, Zarlenga said.

To contact the reporter on this story: Allyson Versprille in Washington at aversprille@bna.com

To contact the editor responsible for this story: Meg Shreve at mshreve@bna.com

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