Senate Finance Committee Chairman Orrin Hatch (R-Utah) on Thursday asked the Treasury Department to publicly release a memo that purportedly allows tax regulations to bypass transparency and cost-benefit analysis requirements.
This memo “further cloaks the regulatory process in secrecy and decreases regulatory transparency at a time when the Executive Branch is attempting to achieve a great deal of regulatory policy through regulatory measures generally and tax regulations specifically,” Hatch said in a letter to Treasury Secretary Jack Lew.
The letter comes after Treasury released guidance earlier this month in an effort to deter companies from moving their headquarters overseas to lower their taxes. The guidance on “corporate inversions” has been criticized by Hatch and other congressional Republicans, who are concerned that Treasury’s actions could hurt investment in the United States.
{mosads}Under the Congressional Review Act, when a proposed regulation is determined to have an annual economic effect of at least $100 million, the rule is subject to a short delay and agencies have to make a cost-benefit analysis of the rule available to Congress.
But for tax regulations, the Obama administration and previous administrations have skipped this step of the regulatory process. Treasury has told the Senate Finance Committee that the bypass takes place because of a “memorandum of understanding” between the White House and the Treasury Department, first signed in 1983, that tax regulations generally don’t have a significant impact on the economy since they just implement statutes, Hatch said.
Hatch said he understands the argument that tax regulations implement laws instead of creating new regulatory burdens. He also said he understands why Treasury would want to be able to issue rules without interference from the Office of Management and Budget.
However, “these considerations must be weighed against the public benefit of regulatory transparency and an honest accounting of the affects tax regulations have on families and businesses across the country,” Hatch said.
The senator asked Lew to respond to his request by May 12.
The Washington Times first reported on Hatch’s letter.