Pressing ahead on disclosure – POLITICO
FIRST LOOK: At this point, there shouldn’t be much doubt — Sen. Ron Wyden won’t be letting go of the Trump administration’s new policy to pare back donor disclosure requirements for political nonprofits anytime soon.
Wyden, the ranking member on the Senate Finance Committee, has been sharply critical of that decision for weeks, charging that it would make it easier for potentially disreputable foreign interests to intrude on the American political system. Now, he is sending a letter to Treasury Secretary Steven Mnuchin that asks for a range of information on how the administration decided to lift the requirement that certain 501(c) groups give the IRS the names and addresses of donors who contributed more than $5,000.
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“The political brazenness of this action shocks the conscience,” Wyden wrote. “At a time when the U.S. intelligence community is warning that foreign actors are actively working to interfere in American elections, the Trump Administration has decided to tie the hands of the only federal agency with visibility into financial flows of foreign funds into dark-money political organizations.”
The Oregon senator and his fellow Democratic tax writers have already tried to pin down Justin Muzinich, President Donald Trump’s choice for deputy Treasury secretary, about that policy change, and Wyden is holding up a Senate floor vote on Muzinich. All the committee’s Democrats also voted against Chuck Rettig, Trump’s pick for be IRS commissioner, in another protest of that decision.
The information that Wyden is requesting is extensive — basically details on any meetings that Treasury held with outside groups on the issue since Jan. 20, 2017 — the day Trump was sworn into office — and records on internal meetings that led to speeches or statements on the new disclosure requirements. Wyden also specifically asked for information on any meeting attended by Muzinich, who said at his confirmation hearing that he didn’t work on the nonprofit disclosure issue but had attended a meeting where it was discussed, along with David Kautter, the assistant Treasury secretary for tax policy and interim IRS chief.
Wyden has yet to disclose whether he will use any of the tools in his arsenal to impede a floor vote for Rettig, who he has acknowledged is otherwise qualified to be commissioner. It’s also unclear how responsive Treasury will actually be to his information request — and, to be honest, what Democrats can do about the disclosure policy beyond continuing to draw attention to it.
PHEW, IT’S FRIDAY. Today is also the 133rd birthday for the electric streetcar, which had its maiden voyage in Baltimore — making about 20 trips at about the speed of 12 miles per hour, per The Baltimore Sun. (Insert snarky comment about the pace at which streetcars move …perhaps not much faster at all right now, at least here in your nation’s capital.)
What’s going on out there? Email: [email protected], [email protected], [email protected], [email protected] Twitter: @berniebecker3, @tobyeckert, @brianfaler, @aaronelorenzo, @POLITICOPro and @Morning_Tax.
WELL, MURPHY BROWN IS COMING BACK TO TV…: It’s not just that the debate over whether the executive branch can unilaterally index capital gains to inflation goes back more than a quarter-century, at least to when then-President George H.W. Bush was fighting for a second term in 1992. It’s that, as Pro Tax’s Brian Faler reports, the contours of the debate remain largely the same. What is different now: The first President Bush stood down after his Treasury Department wrote a legal opinion that maintained he couldn’t index on his own, but Trump might be more of a wild card.
Advocates for indexing “hope the unconventional Trump, with his willingness to make bold use of his executive authority, will give them a different answer this time around. And they contend they have a better legal case this time, pointing to several intervening Supreme Court cases they say buttress their arguments,” Brian writes. Charles Cooper, a Reagan-era Justice official who led the push for the Bush administration to index capital gains in 1992, is among the conservative heavyweights leading the charge once more. (Not to mention: The Wall Street Journal editorial page.) At the same time, veterans of the George H.W. Bush Treasury, like Michael Graetz of Columbia Law School, remain steadfast that Trump administration should leave the issue alone. “There is no statute of limitations on bad ideas,” Graetz said.
On that last point, Andrew Cuomo might agree. The New York governor said Thursday that he would stop using federal rules as the benchmarks for his state’s capital gains tax if Trump does decide to index, our Jimmy Vielkind reports out of Albany. New York might be the home of Wall Street, but such a change in capital gains taxation would cost the state around $500 million, Cuomo said.
It also wouldn’t be the first time that Cuomo has pushed to untether New York tax law from the federal system — the state approved two separate workarounds for the $10,000 cap on state and local deductions in the Tax Cuts and Jobs Act, H.R. 1 (115).
DIGGING IN ON PASS-THROUGHS: Some analysts have asked, in the wake of the TCJA passing, what would keep employees from just becoming independent contractors to take advantage of the tax law’s 20 percent deduction on pass-through income. But as Brian noted, the new Treasury rules seek to cut off that particular trick — by in essence saying the department will continue to assume an employee who becomes a contractor is still an employee. “This presumption may be rebutted only upon a showing by the individual that, under federal tax rules, regulations and principles (including common-law employee classification rules), the individual is performing services in a capacity other than as an employee,” the regulations say. (How well the department can enforce that rule is another question.)
Looking for an extensive deep dive on Treasury’s proposed rules for Section 199A? Here’s Tony Nitti at Forbes.
WORK ON THE HILL, NEVER ENDS: Congress won’t be passing a major tax bill this year, but that doesn’t mean that life has slowed down too much for the Hill’s top tax aides. (Or at least the ones still left on the Hill, after many top staffers left following TCJA’s passage.)
Bloomberg sat down with one of those who stayed, Jay Khosla, now a top aide to Senate Majority Leader Mitch McConnell (R-Ky.) who was at the Finance Committee when TCJA became law, and found that there’s still a lot of work Congress can help out with when it comes to tax law implementation. One issue Khosla is dealing with is particularly important to foreign banks, which believe that they’re being punished for how the tax law interacts with a Dodd-Frank provision on how to fund U.S. branches.