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Nov. 30 — The Treasury Department transition team is beginning to take shape, and the selections may provide insight into the future of tax policy, those familiar with the transition process said.
So far, President-elect Donald Trump has announced his nomination for secretary of the Treasury Department—Steven Mnuchin, a former Goldman Sachs & Co. banker and Hollywood producer with little tax background. He also named two individuals to his Treasury landing team who have tax expertise—Curtis Dubay and Eileen O’Connor.
Senate Finance Committee Chairman Orrin G. Hatch (R-Utah) said in a Nov. 30 news release that Mnuchin’s private sector background would help him “play a pivotal role in bicameral efforts to revamp the nation’s outdated tax code,” while Hatch’s Democratic counterpart said he plans to thoroughly vet Mnuchin.
“Given Mr. Mnuchin’s history of profiting off the victims of predatory lending, I look forward to asking him how his Treasury Department would work for Americans who are still waiting for the economic recovery to show up in their communities,” Wyden said in a Nov. 29 statement.
Despite the political reaction to Trump’s pick for the top Treasury post, a former department official told Bloomberg BNA his appointment doesn’t necessarily mean much in terms of tax policy.
Amid the flood of comments on the role Mnuchin will play in overhauling the tax system, former Treasury official Lisa M. Zarlenga, a partner at Steptoe & Johnson LLP, said his appointment doesn’t necessarily “mean much for tax or tax reform.”
Mnuchin comes from a financial services background, which is not uncommon, Zarlenga said. Henry Paulson, who served as secretary from 2006-09 under President George W. Bush, also worked at Goldman Sachs before joining Treasury.
“Having someone who has the financial experience will be helpful” because the department often deals with the financial markets, Zarlenga said. Although it’s great that Mnuchin has stated that tax reform is a main priority, in terms of actual policy, “I think the real interest will be who he names as assistant secretary for tax policy,” she said. “That’s who’s going to be more in the weeds and doing the day-to-day stuff on tax reform.”
Zarlenga said she hopes to see that position filled by someone with both an in-depth knowledge of the tax system as well as experience working with lawmakers on Capitol Hill.
Trump’s Treasury secretary pick shouldn’t change the role of his landing team, which is to get a “pulse” on the inner workings at the department, said David Eagles, the director of the Partnership for Public Service’s nonpartisan Center for Presidential Transition, which was established in January 2016 to make the transition process between administrations smoother.
Zarlenga described the landing team—Dubay and O'Connor—as the “boots on the ground.” They gather information for the transition team about the organizational structure of a particular department, determine what positions need to be appointed and report the status of ongoing projects.
Dubay, who is a tax expert at the American Bankers Association, was 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. O’Connor‘s law office, Eileen J. O’Connor PLLC, represents clients in connection with civil and criminal federal tax disputes. She served as assistant attorney general for the Justice Department’s Tax Division from 2001-07, and before that worked as a corporate tax law specialist at the Internal Revenue Service.
Trump’s choices for the landing team can provide some insight into the future shape of the Office of Tax Policy. But they don’t “necessarily signal how the Trump administration might function in the tax area,” Zarlenga said.
“If you have somebody who’s a theoretical tax economist and someone who’s a nuts-and-bolts tax attorney, on paper that should be nice a combination when you’re putting together” the Office of Tax Policy, said Forbes contributor Ryan Ellis. Having both perspectives in the transition process should offer a nice balance, said Ellis, who is a senior adviser for tax policy for the Conservative Reform Network and worked for Americans for Tax Reform as lead federal tax policy director for more than a decade.
There are, however, some potential concerns, said Robert Reich, Chancellor’s Professor of Public Policy at the Goldman School of Public Policy at the University of California, Berkeley.
Reich, who directed the economic transition for former President Bill Clinton and also participated in President Barack Obama’s economic transition, said people selected for the landing team generally are individuals with expertise and values aligned with the incoming president. They act as his “eyes and ears” in the department.
Reich, who does not know Dubay personally, said appointing someone from the Justice Department is expected, but having a former Heritage Foundation employee on the team is “a bit less standard just because the Heritage has a very particular ideological standpoint” that he called “way outside the mainstream.”
Ellis, who is a close friend to Dubay, said that shouldn’t be a concern. Dubay “always had a reputation—and I always thought of him this way—as a very careful tax economist; somebody who, while he had a perspective because he’s a conservative working at Heritage, it wasn’t an ideological perspective in terms of excluding data or information.” Ellis called Dubay “mainstream” and “data-driven.”
Grover Norquist, president of Americans for Tax Reform, said Dubay is a “serious policy person” and “Reagan Republican” who works well with center-right activists.
Similarly, those familiar with O’Connor provided positive feedback. Patrick F. Hofer, a partner at Troutman Sanders LLP, who worked as deputy assistant attorney general for policy and planning under O’Connor, said she brings a solid understanding of tax policy to the Trump transition team and described her as a “great team player.”
In an e-mail to Bloomberg BNA, Dubay, on behalf of himself and O’Conner, declined an interview for the story. The Trump transition team didn’t respond to requests for comment.
Eagles said the Center for Presidential Transition started working with presidential candidates, including Democrat Hillary Clinton, in April. The center advised the contenders on the transition process based on information gathered from extensive interviews with former transition leaders, decades of academic research and documents from prior changeovers.
The landing team is there to mostly gather information and report back to a policy team—for Trump, this includes Jim Carter, the main point person overseeing tax overhaul for the transition, who recently filed paperwork to terminate his lobbying ties to Emerson Electric Co.—but some do become permanent staff, Eagles said.
Traditionally, the data shows that about half of the landing team members will end up in the administration but only about a quarter end up in the department they reviewed, Eagles said.
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