Treasury Officials Can Shape Tax Policy
January 31, 2001
Two Treasury officials have powerful roles in the formulation of tax policy, says former Treasury official Bruce Bartlett, an NCPA senior fellow. The appointments to these positions are important because these officials can revolutionize U.S. tax policy if they make a concerted effort to do so.
The first position is the Assistant Secretary for Tax Policy at the Treasury Department.
- He controls the administration's tax legislative process.
- He also oversees the issuance of tax regulations.
- These "interpretations" of laws passed by Congress are often more important than the laws themselves, because they govern how the Internal Revenue Service actually administers the tax code.
Only slightly less important is the number two position, Deputy Assistant Secretary for Tax Analysis.
- The Treasury's Office of Tax Analysis is the largest single body of tax economists anywhere.
- They calculate the impact of tax legislation, produce distribution tables, estimate federal revenues for the president's budget, and conduct long-term studies on issues such as depreciation, the alternative minimum tax and earned income tax credit.
- Studies by OTA economists often appear in professional journals and are also published as working papers on the Treasury Department's website (http://www.ustreas.gov/ota).
- These studies often represent benchmarks upon which all subsequent analyses are based.
There are many important reforms that need to be made in terms of analyzing tax policy. For example, many economists believe that the Treasury and JCT should incorporate macroeconomic effects of tax changes in their revenue estimates -- so-called dynamic scoring.
Thus who Treasury Secretary Paul O'Neill recommends for these positions will be of vital importance.
Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, January 31, 2001.
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