US Treasury officers are anticipated to steer Biden’s world tax battle

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US Treasury officials are expected to lead Biden's global tax fight

WASHINGTON (Reuters) – The U.S. Treasury Department announced several senior positions on Wednesday. According to sources, the new officials plan to advance an important part of President Joe Biden’s economic agenda: advancing tax enforcement and regulation at home and abroad.

FILE PHOTO: U.S. President Joe Biden signs Executive Orders on immigration reform in the Oval Office of the White House in Washington, USA on February 2, 2021. REUTERS / Tom Brenner

Treasury Secretary Janet Yellen added to her leadership team a group of former Obama administration officials with extensive tax, legal and international economic backgrounds.

Former International Monetary Fund official David Lipton will serve as senior counselor for Yellen, an appointment first reported to Reuters on Tuesday.

He is joined by Itai Grinberg and Tom West, who have a background in tax policy, and Federal Reserve attorney Laurie Schaffer.

Yellen is expected to push for sweeping changes to global tax enforcement and regulation with the personal blessing of Biden, a person with direct knowledge of the matter. Biden is seeking tougher enforcement of existing laws to reduce income inequality and pay for spending proposals, the person said.

The Treasury said Yellen had held talks with foreign ministers from the allied UK, Germany, France and Italy since she was sworn in to discuss tax issues, including finding ways to tax multinational corporations’ income “efficiently and fairly”.

She also promised to rejoin the Organization for Economic Co-operation and Development negotiations on taxing large multinational technology services companies like Facebook Inc and Google, which her predecessor Steven Mnuchin had abandoned.

Over a dozen countries have unilaterally taxed such digital services. Biden has argued that sometimes big tech companies have too little taxation.

His administration is also considering new guidelines for the Internal Revenue Service, sanctions on tax havens, and synchronizing the US tax approach with other countries, according to the person familiar with the matter.

The new hires are expected to help the Democratic president fulfill his promise to undo former President Donald Trump’s tax legacy, including cutting corporate taxes and reducing enforcement.

Treasury and White House spokesmen did not immediately respond to requests for more details on the administration’s tax strategy.

TAX GAP

The Internal Revenue Service estimated in 2019 that the average annual gross tax gap – the difference between statutory taxes and taxes levied – averaged $ 441 billion for the 2011-2013 tax years, largely due to underreporting of individuals’ income, payrolls and taxes Companies.

The tax bill, passed by Trump and the Republicans in late 2017, cut corporate taxes by 40%, and the reduced revenue contributed to a larger federal deficit.

The tax team is built up faster than other areas of the Treasury.

Lipton, who served as the IMF’s second-largest official for over eight years and led the institution’s policy development, is expected to assist Yellen in liaising with US allies on economic policy issues and coordinating G20 and G7 financial meetings and summits familiar with his appointment said.

West, a tax advisor to accounting firm KPMG International Ltd, who served five years in the tax policy bureau under former President Barack Obama, will return as deputy assistant secretary for domestic corporate tax, the Treasury Department said.

Grinberg, who served in international tax functions during the reigns of George W. Bush and Obama, is returning to the Treasury Department after a decade as a professor at Georgetown Law School as deputy assistant secretary for multilateral taxes in the tax policy bureau.

Schaffer, an assistant general counsel for the Federal Reserve Board, would be returning to the Treasury Department as assistant general general counsel, the department said. Schaffer was Deputy General Counsel of the Treasury Department for Banking and Finance from 2008 to 2011.

The Treasury Department also appointed Fordham University Tax Law Professor Rebecca Kysar as Advisor to the Assistant Secretary for Tax Policy. As an expert in international tax law, Kysar Biden’s transition team helped review the tax policy and finance department.

Reporting by Trevor Hunnicutt and David Lawder; Additional reporting from Andrea Shalal; Editing by Dan Burns, Heather Timmons, and David Gregorio