❮ Return to Our Work

Blog Post | February 4, 2021

Biden's Newest Treasury Tax Appointees Delight and Disappoint

2020 Election/TransitionFinancial Regulation
Biden's Newest Treasury Tax Appointees Delight and Disappoint

Some mixed news for progressive tax enthusiasts: Joe Biden’s administration has chosen both a committed progressive tax advocate and a Republican career expert in corporate tax avoidance for its first two appointees to the Treasury’s Office of Tax Policy. We’re now in a strange situation where experts who testified on opposite sides of the 2017 Tax Cuts and Jobs Act will now serve shoulder-to-shoulder.

On Monday, Kimberly Clausing, the Eric M. Zolt Chair in Tax Law and Policy at UCLA Law, was sworn in as the Office’s Deputy Assistant Secretary for Tax Analysis. 

Clausing’s appointment is an undeniable win for progressives. Clausing is a renowned expert in international corporate taxation and has long been a proponent of reforming tax laws to prevent base erosion — the practice in which businesses reduce the tax base by lowering their domestic corporate profits — and profit-shifting overseas. During the 2017 debates over tax reform, Clausing testified before Congress on the need for more progressive taxation and preserving corporate income tax rates above those on individual income. At Treasury, Clausing will undoubtedly continue to reliably support tax reforms to capture missed revenue due to corporate tax avoidance strategies. 

With Clausing on board, Biden’s Treasury appears inclined to work together with our international allies to ensure that corporations contribute to social welfare. After a recent conversation with Treasury Secretary Janet Yellen, German Finance Minister Olaf Scholz expressed optimism that the digital services tax, which the Organisation for Economic Co-operation and Development (OECD) had worked on for years and which Trump opposed, would finally move forward this year. 

In a more confounding move, the Biden Treasury Department also added Itai Grinberg to its ranks as Deputy Assistant Secretary for Multilateral Tax in the Office of Tax Policy. 

Grinberg has a long history of promoting tax policy that benefits big corporations. In the early 2000s, before his first stint in government under Republican George W. Bush, Grinberg advised corporations on tax law and policy at BigLaw firm Skadden Arps. In 2005, President Bush appointed him to serve as counsel to his Panel on Tax Reform, which ultimately proposed lowering the tax rates on long-term capital gains and corporate income and replacing the earned income tax credit with a less generous “Work Credit.”

Grinberg was a key Republican proponent for numerous components of Trump’s 2017 tax cut bill. At the very same hearing in October 2017 in which Clausing testified against lowering corporate tax rates, Grinberg testified as a Republican witness in favor of that very policy. Grinberg claimed that corporate tax cuts were necessary to “[level] the playing field” between US corporations and foreign competitors. In reality, the 2017 tax bill further incentivized offshoring while enriching the wealthy and depriving the government of revenue needed to fund vital public programs. He also voiced support for  switching to a territorial tax system, in which the US would only tax companies on profits they book in the US rather than globally. In other words, Grinberg proposed at the hearing a move which Clausing explicitly opposed and which would further incentivize corporate profit shifting. 

On the campaign trail, Biden assailed the Trump tax bill as “a $1.5 trillion tax giveaway primarily for large corporations and the wealthy.” As an avid supporter of many of the major pieces of that bill, Grinberg should have been automatically barred from consideration for Biden’s tax team. The 2017 tax bill was a massive gift to the wealthy and big corporations while doing little for the middle and lower classes. Worse, Mnuchin’s Office of Tax Policy exacerbated the plutocratic aspects of the bill via overly generous interpretations of the law that increased the cost of the bill by over $100 billion. Although Grinberg’s portfolio will purportedly be narrowly focused on working with the OECD, no one with such regressive beliefs on taxation should come anywhere close to affecting tax policy.

Even Grinberg’s past statements on multilateral tax agreements — the narrow area on which he’ll focus at Treasury — are, at best, extremely worrisome. Unlike Clausing, who has emphasized the importance of international collaboration to combat corporate tax avoidance and evasion, Grinberg has criticized our allies for enforcing tax laws. 

Indeed, Grinberg even suggested that the Obama administration adopt extreme retaliatory measures against the European Union (EU) when it began investigating Apple and other U.S. firms for colluding with Ireland to profit shift. Grinberg accused the EU of discriminating against US companies and dismissed the investigation as “untethered from any legal or economic principle.” While the case is now pending in front of the European Court of Justice, American companies routinely shelter profits abroad: a 2019 report found that Big Tech firms used overseas tax havens to avoid paying over $100 billion. It is curious why Grinberg would use “economic principle” to defend companies that have failed to pay billions in taxes, as if  corporate profit-shifting has any substantive economic purpose beyond lowering tax liability. 

As corporations enrich themselves during the pandemic, it is vital that Biden’s Treasury Department take a firm stance against tax avoidance and evasion both at home and abroad. When making hiring selections, the Biden administration must ask itself whether its nominees are ready and willing to work on behalf of the American people and ensure that corporations pay their fair share. Clausing easily passes that test. Grinberg comes nowhere near. 

Header image: “Treasury Department” by Weave is licensed under CC BY-ND 2.0

2020 Election/TransitionFinancial Regulation

More articles by Sion Bell More articles by Miranda Litwak

❮ Return to Our Work