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Dec. 13 — Mark J. Mazur would like to have seen improvements to the Affordable Care Act and less politicization of Treasury regulations, but he describes overcoming partisanship as a constant hurdle during his tenure at the highest levels of the Treasury Department.
There were moments during the Obama administration where lawmakers—both Democrats and Republicans—were able to work together to enact significant tax changes, Mazur told Bloomberg BNA. But he said some of his biggest disappointments resulted from missed opportunities due to long stretches of congressional gridlock.
Mazur, who was deputy assistant secretary for tax analysis starting in 2009 before being confirmed as assistant secretary for tax policy in 2012, is leaving the department to become director of the Urban-Brookings Tax Policy Center on Feb. 1, the center announced Dec. 13.
Positive developments during his Treasury service included legislation like the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 and the Protecting Americans from Tax Hikes (PATH) Act of 2015, he said in an interview Dec. 9.
Disappointments included business tax overhaul and fixes to the Affordable Care Act, which was successful in reducing the number of uninsured people but could have been improved, he said. “I wish we’d been a little more persuasive with Congress on the need to make some mid-course adjustments,” Mazur told Bloomberg BNA.
House Republicans in their “A Better Way” agenda released in June suggested repealing the health care law and replacing it with a new system. They said ACA drives up premiums and deductible costs for individuals, families and businesses. In October, Obama announced that 2017 premiums for a popular group of health plans sold on HealthCare.gov would increase by an average 25 percent.
While rising premiums are a growing concern, patient groups warn against repealing large parts of the law before drafting replacement legislation. In recent interviews, Obama said the problems with ACA are fixable—through efforts like expanding Medicaid and offering more tax credits—but added that partisan opposition has made progress impossible.
“We’d known that it was an act that was not perfectly drafted and needed a bunch of tweaks, and in the normal process Congress would have done technical corrections and fixed it,” Mazur said. “Unfortunately, we weren’t able to get a consensus to move ahead with those” solutions.
The administration’s failed effort at business tax overhaul is another area Mazur said he was disappointed not to have accomplished during his tenure.
In 2012, the White House and the Treasury Department released “The President’s Framework for Business Tax Reform,” which was updated in April 2016. The plan would lower the corporate tax rate to 28 percent, among other provisions.
The president’s plan was in about two-thirds agreement with Republican proposals like the Tax Reform Act of 2014 proposed by former Ways and Means Committee Chairman Dave Camp, Mazur said.
“In a normal environment, people would work together to bridge the remaining one-third of the gap,” he said. “Instead, what happened here is that partisanship is so bad that people focused on the one-third that was not in agreement and just said, ‘Well we can’t possibly make any progress,’” he said.
Regulations weren’t immune from partisan attacks, Mazur pointed out.
Treasury and the Internal Revenue Service proposed regulations in August under tax code Section 2704 intended to stem abuses in which valuation discounts were being used solely to avoid paying estate taxes. But the rules have generated strong protests from family businesses and conservative lawmakers, who say the guidance is too broad.
Mazur said the guidance was incorrectly interpreted as “an assault on all minority discounts,” but the Treasury’s attorneys made it “abundantly” clear that that wasn’t the intent. “I think it was an intentional misreading by people who don’t like the estate tax generally,” he said.
The regulations haven’t been finalized, and House Ways and Means Committee Chairman Kevin Brady (R-Texas) has suggested that the Trump administration will put a stop to them on “day one.”
Treasury and the IRS also came under fire from Republican lawmakers for the hotly-debated “debt-equity” rules under Section 385. The rules finalized in October are intended to prevent multinational companies from stripping income out of the U.S. through loans to subsidiaries.
Before finalizing the rules, Treasury met with affected taxpayers, they voiced their concerns, and the end result was a final product that reflected “a better approach than the proposed regulations,” Mazur said. “That’s kind of the point,” he said. It isn’t helpful when lawmakers call for withdrawal before rules have had a chance to make their way through the regulatory process, he added.
“The overall tax system has become much more progressive since the Obama administration started,” Mazur said, pointing to that development as the administration’s tax legacy.
“If you just start to think about the individual components, you have tax deductions for lower-income people through expansion of the Earned Income Tax Credit,” he said. Additionally, “you have some modest tax cuts for middle-income people with the American Opportunity Tax Credit.” At the same time, those in the highest income brackets saw “fairly substantial tax increases,” he said.
It was a conscious choice by the Obama administration to take steps in that direction, he said. And “while it doesn’t reverse the growing income inequality, it does sort of push you in the opposite direction.”
Mazur also said he’s proud of Treasury’s work regarding same-sex couples. In August the IRS and Treasury issued final rules governing how these couples can file their tax returns. “I think that was an important step forward,” Mazur said.
He recalled a phone call where a stakeholder thanked Treasury Secretary Jacob J. Lew and the rest of the department for being on the right side of history. “We normally don’t get that when we put out tax guidance so that was quite satisfying,” Mazur said.
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