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DEPARTMENT OF
THE TREASURY
William L. Walton,
Stephen Moore,and David R. Burton

INTRODUCTIONThe U.S. Treasury Department has a broad regulatory and policy reach. The
next Administration should make major policy changes to: (1) reduce regulatory
impediments to economic growth that reduce living standards and endanger prosperity; (2) reduce regulatory compliance costs that increase prices and cost jobs;(3) promote fiscal responsibility; (4) promote the international competitivenessof U.S. businesses; and (5) better respect the American people’s due process andprivacy rights.
These goals should be accomplished through: executive action (primarily treasury orders and treasury directives) and departmental reorganization;
rulemakings; promoting constructive policies in Congress; actions in internationalorganizations; and treaties.
The primary subject matter focus of the incoming Administration’s Treasury
Department should be:lTax policy and tax administration;lFiscal responsibility;l

Improved financial regulation;lAddressing the economic and financial aspects of the geopolitical threat
posed by China and other hostile countries;— 691 —

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l

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Reform of the anti-money laundering and beneficial ownership
reporting systems;
Reversal of the racist “equity” agenda of the Biden Administration; andReversal of the economically destructive and ineffective climate-related
financial-risk agenda of the Biden Administration.

BIDEN ADMINISTRATION TREASURY DEPARTMENT

The Biden Administration Treasury Department has failed badly in achieving
every one of the agency’s core objectives. The financial affairs of the nation haveseldom been in worse condition, with the national debt expanding by more than $4
trillion in Biden’s first two years in office. No President in modern times—perhaps
ever—has been more fiscally reckless than has the Biden Administration.
The soundness and stability of U.S. currency, the dollar, has been put at risk
because of the worst inflation in four decades. American families have been
made poorer by Biden’s economic strategy of taxing, spending, borrowing,
regulating, and printing money. The average family has seen real annual earnings fall about $6,000 during the Biden Administration.1 In 2022, the average
American’s 401(k) plan dropped in value from $130,700 to $103,900—more
than 20 percent.2
Why has the Biden Administration failed to achieve virtually all components of
its mission? Under the leadership of Treasury Secretary Janet Yellen, the department has made “equity” and “climate change” among its top five priorities. The
next Administration must act decisively to curtail activities that fall outside Treasury’s mandate and primary mission. Treasury must refocus on its core missionsof promoting economic growth, prosperity, and economic stability.
For a clear statement of Treasury’s mission drift, one need look no further
than Secretary Yellen’s introduction in the Treasury Department’s Fiscal Year
2022–2026 Strategic Plan:
We will have to address the structural problems that have plagued our
economy for decades: the decline in labor force participation, income andracial inequality, and serious underinvestment in crucial public goods likechildcare, education, and physical infrastructure. And then there are risingchallenges, like climate change, which, left unchecked, will undermine every
aspect of our economy from supply chains to the financial system.3

Treasury’s mission drift into a “woke” agenda, is exemplified in a comparisonof Domestic Finance’s changed responsibilities from 2015 to 2023:— 692 —

2025 Presidential Transition Project[2015] Domestic Finance works to preserve confidence in the U.S. Treasury
securities market, effectively manage federal fiscal operations, strengthen
financial institutions and markets, promote access to credit, and improvefinancial access and education in service of America’s long-term economic
strength and stability.4[2023] Domestic Finance works to support equitable and sustainableeconomic growth and financial stability through policies to increase theresilience of financial institutions and markets and financial wellbeing of
consumers, and to increase access to credit for small businesses and low-tomoderate income communities.5
TREASURY DEPARTMENT ORGANIZATIONThe Treasury Department is one of the few executive agencies recognized in
the U.S. Constitution. It states:
No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts andExpenditures of all public Money shall be published from time to time.6

The Treasury Department was established by statute in 1789. Today, it is responsible for financing the federal government, promoting economic prosperity, andensuring the financial security of the United States. In fiscal year 2022, Treasury
received discretionary appropriations of approximately $16.4 billion.7 It also has
highly variable “mandatory” expenses (COVID-related CARES Act spending,for example).
In fiscal year (FY) 2022, Treasury employed approximately 96,000 full-time
employees, including approximately 81,000 at the Internal Revenue Service(IRS).8 Approximately four-fifths of Treasury’s discretionary funds are used for
IRS operations. The remaining amounts are for its offices, bureaus, and international assistance programs.
Treasury is organized into various departmental offices,9 seven bureaus,10 and
four inspectors general.11
Departmental Offices. Departmental offices are composed of divisions headedby under-secretaries and assistant secretaries who are primarily responsible forpolicy formulation and overall management of the Treasury Department.
Domestic Finance is run by the Under Secretary for Domestic Finance, to whom
the assistant secretaries for financial markets, financial stability, financial institutions and the fiscal assistant secretary report. Additionally, the Financial Stability
Oversight Council (FSOC) Secretariat and the Office of Financial Research reportto the Under Secretary for Domestic Finance.

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Terrorism and Financial Intelligence. Terrorism and Financial Intelligence (TFI)
was created in 2004 as part of the larger reorganization of the U.S. government topromote homeland security following the 9/11 terrorist attacks. TFI is charged withthe mission of disrupting international financial support for terrorists, weapons ofmass destruction proliferation, narcotics trafficking, money laundering, and othernational security threats. It is also responsible for implementing and enforcing
economic sanctions programs and supporting the wider law enforcement community in investigating financial crimes. It is led by the Under Secretary for Terrorism
and Financial Intelligence.
International Affairs protects and supports U.S. economic prosperity andnational security by working to foster the most favorable external environment forsustained employment and economic growth in the United States. The most crucial
functions of the Office of International Affairs relate to managing the U.S.–China
Strategic Dialogue; representing U.S. interests in the World Bank, International
Monetary Fund (IMF) and other multilateral development banks; and overseeing
the Committee on Foreign Investment in the U.S. (CFIUS). It is led by the Under
Secretary for International Affairs.
Tax Policy formulates and develops tax policies and programs and works with
Congress to get them passed into law. It reviews and issues regulations drafted byattorneys from the IRS’s Office of Chief Counsel to administer the Internal Revenue Code, negotiates tax information exchange agreements with the tax authorities
of foreign governments, participates in international tax organizations, and provides economic and legal policy analysis for domestic and international tax policy
decisions. This office also provides revenue estimates for the President’s budget.
It is led by the Assistant Secretary for Tax Policy.
Economic Policy reports on current and prospective economic developments
and assists in the determination of appropriate economic policies. This office is
responsible for the review and analysis of domestic economic issues and developments in financial markets.
The Treasurer of the United States is a statutory office that has been assigned
varying duties in recent Administrations. In addition to performing public outreach, treasurers have at times headed Treasury’s financial education programand overseen the U.S. Mint and Bureau of Engraving and Printing.
Four Inspectors General provide independent audits, investigations, and oversight of Treasury and its programs: The Office of the Inspector General of the
Department of Treasury; Treasury Inspector General for Tax Administration;
Special Inspector General for the Troubled Asset Relief Program; and the Special
Inspector General for Pandemic Recovery.
Treasury Bureaus. Seven Treasury Department bureaus comprise 98 percentof the Treasury work force and are responsible for carrying out specific operations
assigned to the department.

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The Alcohol and Tobacco Tax and Trade Bureau collects federal excise taxes
on alcohol, tobacco, firearms, and ammunition, and is responsible for enforcing
and administering laws covering the production, use, and distribution of alcohol products.
The Internal Revenue Service is the largest of the department’s bureaus, accounting for about 85 percent of Treasury’s personnel and about four-fifths of its
appropriated budget. It administers and enforces U.S. tax laws.
The Bureau of Engraving and Printing develops and produces U.S. currency notes.
The Financial Crimes Enforcement Network (FinCEN) is designed to protect
the financial system from illicit use. It also administers the beneficial ownership
reporting regime mandated by the Corporate Transparency Act.12
The Bureau of the Fiscal Service provides central payment services to federal
program agencies, operates the U.S. government’s collections and deposit systems,
provides government-wide accounting and reporting services, manages the collection of delinquent debt owed to the U.S. government, borrows the money needed tooperate the government through the sale of U.S. Treasury securities (including thestate and local government series), and accounts for and services the public debt.
The United States Mint designs and mints U.S. circulating and bullion coins.
The Office of the Comptroller of the Currency (OCC) charters, regulates, andsupervises national banks and federal savings associations (thrifts) to ensure thatthey operate in a safe and sound manner, provide fair access to financial services,and comply with applicable laws and regulations. The OCC also supervises federal branches and agencies of foreign banks and has rulemaking authority for all
savings associations.
TAX POLICY

Tax policy has a powerful impact on the economy. The Treasury Department
should develop and promote tax reform legislation that will promote prosperity.
To accomplish this, tax reform should improve incentives to work, save, and invest.
This, in turn, is accomplished primarily by reducing marginal tax rates,13 reducing
the cost of capital14 and broadening the tax base to eliminate tax-induced economic
distortions by eliminating special-interest tax credits, deductions, and exclusions.
Tax compliance costs will decline precipitously if the tax system is substantiallysimplified.15 The Treasury Department should also promote tax competition rather
than supporting an international tax cartel.
Principles of Good Tax Policy. These are the principles governing
good tax policy.
lFirst, the tax system should raise the revenue necessary to fund a limited
government for constitutionally appropriate activities. It should raise thisrevenue such that it: (a) applies the least economically destructive forms of— 695 —

Mandate for Leadership: The Conservative Promise

taxation;16 (b) has low tax rates on a broad, neutral tax base; (c) minimizes
interference with the operation of the free market and free enterprise; and(d) minimizes the cost to taxpayers of compliance with and administrationof the tax system.
llSecond, the tax system should minimize its adverse impact on the family
and the core institutions of civil society.
Third, the tax system should be applied consistently—with special privileges
for none—and respect taxpayer due process and privacy rights.

The current tax system is inconsistent with these principles and needs to bereformed to promote prosperity, reduce compliance costs, and improve fairness.
The incoming Administration should promote immediate intermediate reforms
to the existing system. It should then pursue fundamental tax reform.
Intermediate Tax Reform. The Treasury should work with Congress to simplify the tax code by enacting a simple two-rate individual tax system of 15 percent
and 30 percent that eliminates most deductions, credits and exclusions. The 30
percent bracket should begin at or near the Social Security wage base to ensure
the combined income and payroll tax structure acts as a nearly flat tax on wage
income beyond the standard deduction. The corporate income tax rate should
be reduced to 18 percent. The corporate income tax is the most damaging tax inthe U.S. tax system, and its primary economic burden falls on workers because
capital is more mobile than labor.17 Capital gains and qualified dividends should
be taxed at 15 percent. Thus, the combined corporate income tax combined withthe capital gains or qualified dividends tax rate would be roughly equal to the top
individual income tax rate.18 The system should allow immediate expensing for
capital expenditures and index capital gains taxes for inflation.
In addition, intermediate tax reform should repeal all tax increases that werepassed as part of the Inflation Reduction Act,19 including the book minimum tax,
the stock buyback excise tax, the coal excise tax, the reinstated Superfund tax, andexcise taxes on drug manufacturers to compel them to comply with Medicare pricecontrols. The next Administration should also push for legislation to fully repeal
recently passed subsidies in the tax code, including the dozens of credits and tax
breaks for green energy companies in Subtitle D of the Inflation Reduction Act.20
Universal Savings Accounts. All taxpayers should be allowed to contributeup to $15,000 (adjusted for inflation) of post-tax earnings into Universal Savings
Accounts (USAs). The tax treatment of these accounts would be comparable toRoth IRAs. USAs should be highly flexible to allow Americans to save and invest as
they see fit, including, for example, investments in a closely held business. Gainsfrom investments in USAs would be non-taxable and could be withdrawn at any— 696 —

2025 Presidential Transition Projecttime for any purpose. This would allow the vast majority of American families tosave and invest without facing a punitive double layer of taxation.
Entrepreneurship. To encourage entrepreneurship, the business loss limitation should be increased to at least $500,000. Businesses should also be allowed to
fully carry forward net operating losses. Extra layers of taxes on investment andcapital should also be eliminated or reduced. The net investment income surtax
and the base erosion anti-abuse tax should be eliminated. The estate and gift tax
should be reduced to no higher than 20 percent, and the 2017 tax bill’s temporary
increase in the exemption amount from $5.5 million to $12.9 million (adjusted
for inflation) should be made permanent.21 The tax on global intangible low-taxed
income should be reduced to no higher than 12.5 percent, with the 20 percent
haircut on related foreign tax credits reduced or eliminated.22
All non-business tax deductions and exemptions that were temporarily suspended by the 2017 tax bill should be permanently repealed, including the bicycle
commuting expense exclusion, non-military moving expense deductions, and themiscellaneous itemized deductions.23 The individual state and local tax deduction,
which was temporarily capped at $10,000, should be fully repealed. Deductions
related to educational expenses should be repealed. Special business tax preferences, such as a special deduction for energy-efficient commercial building
properties, should be eliminated.24
Wages vs. Benefits. The current tax code has a strong bias that incentivizes
businesses to offer employees more generous benefits and lower wages. This limits
the freedom of workers and their families to spend their compensation as theysee fit—and it can trap workers in their current jobs due to the jobs’ benefit packages. Wage income is taxed under the individual income tax and under the payroll
tax. However, most forms of non-wage benefits are wholly exempt from both ofthese taxes.
To reduce this tax bias against wages (as opposed to employee benefits), thenext Administration should set a meaningful cap (no higher than $12,000 per year
per full-time equivalent employee—and preferably lower) on untaxed benefits
that employers can claim as deductions. Employee benefit expenses other thantax-deferred retirement account contributions should count toward the limitation, whether offered to specific employees or whether the costs relate to a sharedbenefit like building gym facilities for employees.25 Tax-deferred retirement contributions by employers should not count toward this limitation insofar as they
are fully taxable upon distribution. Only a percentage of Health Savings Accounts(HSA) contributions (which are not taxed upon withdrawal) should count toward
the limitation.26 The limitation on benefit deductions should not be indexed toincrease with inflation.27 Employers should also be denied deductions for healthinsurance and other benefits provided to employee dependents if the dependents
are aged 23 or older.

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Fundamental Tax Reform. Achieving fundamental tax reform offers theprospect of a dramatic improvement in American living standards and an equally
dramatic reduction in tax compliance costs. Lobbyists, lawyers, benefit consultants, accountants, and tax preparers would see their incomes decline, however.
The federal income tax system heavily taxes capital and corporate income anddiscourages work, savings, and investment.
The public finance literature is clear that a consumption tax would minimize
government’s distortion of private economic decisions and thus be the least economically harmful way to raise federal tax revenues.28 There are several forms thata consumption tax could take, including a national sales tax, a business transfer
tax, a Hall–Rabushka flat tax,29 or a cash flow tax.30
Supermajority to Raise Taxes. Treasury should support legislation instituting
a three-fifths vote threshold in the U.S. House and the Senate to raise income or
corporate tax rates to create a wall of protection for the new rate structure. Manystates have implemented such a supermajority vote requirement.
Tax Competition. Tax competition between states and countries is a positive
force for liberty and limited government.31 The Biden Administration, under the
direction of Treasury Secretary Janet Yellen, has pushed for a global minimum
corporate tax that would increase taxation and the size of government in the U.S.
and around the world. This attempt to “harmonize” global tax rates is an attempt
to create a global tax cartel to quash tax competition and to increase the tax burden
globally. The U.S. should not outsource its tax policy to international organizations.
Organization for Economic Co-operation and Development. The Organization for Economic Co-operation and Development (OECD), in conjunction with
the European Union, has long tried to end financial privacy and impose regulations
on countries with low (or no) income taxes. In fact, on tax, environmental, corporate governance and employment issues, the OECD has become little more thana taxpayer-funded left-wing think tank and lobbying organization.32 The UnitedStates provides about one-fifth of OECD’s funding.33 The U.S. should end its financial support and withdraw from the OECD.
TAX ADMINISTRATIONThe Internal Revenue Service is a poorly managed, utterly unresponsive andincreasingly politicized agency, and has been for at least two decades. It is time formeaningful reform to improve the efficiency and fairness of tax administration,better protect taxpayer rights, and achieve greater transparency and accountability.
A substantial number of the problems attributed to the IRS are actually a functionof congressional action that has made the Internal Revenue Code ridiculously
complex, imposed tremendous administrative burdens on both the public and the
IRS, and given massive non-tax missions to the IRS. But the culture, administrative
practices, and management at the IRS need to change.

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Doubling the IRS? The Inflation Reduction Act contains a radical $80 billion
expansion of the IRS—enough to double the size of its workforce.34 Unless Congress
reverses this policy, the IRS will become much more intrusive and impose still
greater costs on the American people.
The Biden Administration has also sought to make the tax system’s administrative burden much worse in other ways. For example, it has proposed creating acomprehensive financial account information reporting regime that would apply to
all business and personal accounts with more than $600. Banks would be required
to collect the taxpayer identification numbers of and file a revised Form 1099-K
for all affected payees, as well as provide additional information.35 This massive
increase in the scope and breadth of information reporting should be unequivocally opposed.
Management. The IRS has approximately 81,000 employees.36 Of those, only
two are presidential appointments—the Commissioner and the Chief Counsel.37
As a practical matter, it is impossible for these two officials to overcome bureaucratic inertia and to implement policy changes that the IRS bureaucracy wants toimpede. That is why, notwithstanding decades of sound and fury, almost nothing
has changed at the IRS.
For the IRS to change and become more accountable, more transparent, andbetter managed, there is a need to increase the number of Presidential appointments subject to Senate confirmation, and not subject to Senate confirmation, at
the IRS. At the very least, Congress should ensure that the Deputy Commissioner
for Services and Enforcement, the Deputy Commissioner for Operations Support,
the National Taxpayer Advocate, the Commissioner of the Wage and Investment
Division, the Commissioner of the Large Business and International Division,
the Commissioner of the Small Business Self-Employed Division, and the Commissioner of the Tax Exempt and Government Entities Division are presidential
appointees.38
Information Technology. Despite the investment of billions of dollars for atleast two decades, IRS information technology (IT) systems remain deficient.39
The IRS inadequately protects taxpayer information, its IT systems do not adequately support operations or taxpayer services, and its matching and detection
algorithms are antiquated.
These problems are not primarily about resources. The IRS has spent approximately $27 billion on IT during the past decade, with $7 billion of that designatedas “development, modernization and enhancement.“40 The problem is one of management. The bureaucracy is not up to the task, and neither Congress nor a longline of IRS commissioners has forced changes.
A Deputy Commissioner for Operations Support with strong IT management
skills should be appointed by the IRS Commissioner or the President (once theposition is made a presidential appointment). The various subordinates to the— 699 —

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Deputy Commissioner should be replaced. A thorough review of IT contracts
should be conducted. The Integrated Modernization Business Plan41 should be
systematically reviewed and a version of it cost-effectively implemented. An oversight board composed of private sector IT experts should be established and given
the authority to conduct meaningful, contemporaneous oversight.
TAXPAYER RIGHTS AND PRIVACY

Legal protections for taxpayer rights and privacy have improved during the past
three decades, but they remain inadequate.42 Congress should do more. For example, interest on overpayments should be the same as interest on underpayments
rather than the government receiving a higher rate, the time limit for taxpayers
to sue for damages for improper collection actions should be extended, the jurisdiction of the Tax Court should be expanded, and the tax penalty system should
be reformed by rationalizing the penalty structure and reducing some of the mostpunitive penalties.43
The Office of the Taxpayer Advocate was created by Congress to assist taxpayers when the IRS bureaucracy is unresponsive or negligent. About 1.7 percent of
the IRS budget goes to this function.44 Each year, the Office handles more than
250,000 cases, helping taxpayers to deal with the IRS. Each year, it issues nearly
2000 taxpayer assistance orders, a form of administrative injunction, forcing therest of the IRS to stop taking unwarranted actions.45
Congress should provide the Office of the Taxpayer Advocate with greater
resources so that it may better assist taxpayers suffering from wrongful IRS actions.
The office should also be strengthened by, among other things:
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Ensuring that the National Taxpayer Advocate can make his or her own
personnel decisions to protect its independence;
Ensuring NTA access to files, meetings, and other information needed toassist taxpayers or investigate IRS administrative practices;
Requiring the IRS to address the NTA’s comments in final rules
and including the NTA in deliberations prior to the release of a
proposed rule; andAuthorizing the NTA to file amicus briefs independently.

Administrative Burden. In 2021, Americans filed 261 million tax returns andan astounding 4.7 billion information returns (such as Form W-2s, Form 1098s
and Form 1099s).46 Complying with tax law costs Americans more than $400 billion annually, or about 2 percent of gross domestic product.47 Although the IRS— 700 —

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administers these reporting programs, most of this expense is mandated by Congress, not the IRS.
One of the primary reasons that Congress mandates ever-increasing information reporting is that the Treasury Department and the Joint Committee on
Taxation staff almost always overestimate how much revenue will be gained fromstill more burdensome information reporting, and they do not estimate or reportprivate compliance costs. Congress and the Treasury Department must undertakea serious review of the information reporting regime and reduce the burden on the
public—especially small businesses. Small businesses suffer disproportionatelyfrom complexity and administrative burdens. Costs do not increase linearly withsize, so elevated administrative costs have an adverse effect on the competitivenessof small firms.
Budget. The operating budget of the IRS should be held constant in real terms.
The resources allocated to the Office of the Taxpayer Advocate should be increased
by at least 20 percent (about $44 million). The Office of Equity, Diversity, andInclusion should be closed. Provided that IT management is changed; an effective,
well-considered implementation plan is adopted; and serious oversight is put inplace, additional resources dedicated solely to IT modernization may be warranted.
INTERNATIONAL AFFAIRSThe Treasury Department should withdraw from Senate consideration the
Protocol Amending the Convention on Mutual Administrative Assistance in Tax
Matters.48 The protocol will lead to substantially more transnational identity theft,crime, industrial espionage, financial fraud, and suppression of political opponents and religious or ethnic minorities by authoritarian and corrupt governments,
including China, Colombia, Nigeria, and Russia. Unlike the original multilateralconvention, the amended convention is open to all governments—including many
that are either hostile to the United States, have serious corruption problems, or
have inadequate privacy protections. The new Administration should also oppose
the multilateral Competent Authority Agreement on Automatic Exchange ofFinancial Account Information.49
International organizations such as the OECD, the World Bank, and the International Monetary Fund espouse economic theories and policies that are inimical
to American free market and limited government principles. The global elites who
operate the IMF regularly advance higher taxes and big centralized government.
The IMF has intervened in American policy debates—and has even recommended
that the U.S. raise taxes. The IMF’s record of advancing global financial stability
has been mixed at best. Its development assistance and lending programs in thirdworld countries have more often than not retarded growth rather than advancing it.
The Treasury Department plays an important role in these international
institutions and should force reforms and new policies. The U.S., however, should— 701 —

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withdraw from both the World Bank and the IMF and terminate its financial contribution to both institutions.
If the U.S. is to provide economic assistance or humanitarian aid to other nations,
it should do so unilaterally—not through the pass-throughs of international aid organizations, non-governmental organizations, or other nations. These organizations
and countries simply create expensive middle-men, while U.S. funds are intercepted
before being distributed to those in need. Also, these foreign entities have intereststhat do not coincide with American national security and economic interests.
FISCAL RESPONSIBILITY

Treasury should make balancing the federal budget a mission-critical objective.
The federal budget absorbs enormous resources from the economy, both in money
taken from taxpayers and in money borrowed. The budget should be balanced bydriving down federal spending while maintaining a strong national defense andnot raising taxes.
To reduce interest payments on the debt, Treasury should lock in current relatively low interest rates by issuing longer duration bonds, and even consider
creating a 50-year treasury bill. Most of the federal debt rolls over on average about
every three to four years. But interest rates, even with the latest Federal Reserve
rate increases, are still below the 5 percent historical average. Treasury would thus
save taxpayers money during the next several decades by issuing fewer short-term
notes that will probably have to be rolled over at higher rates in the future.
To promote transparency of finances, each year Americans should receive afinancial statement of the U.S. government alerting citizens of the revenues, expenditures, deficit, and debt for the preceding fiscal year. The statement should also
include this individual family’s pro-rata share of the debt based on family size.
INTERNATIONAL COMPETITIVENESSThe Treasury must act more assertively in international financial institutions toprotect and advance U.S. national interests—and oppose those that do not. It should
employ a carrot-and-stick approach by increasing its activity and commitment tothose financial institutions that are willing and able to adjust to this new approachand by zeroing out or potentially exiting those institutions that rely on U.S. capitalwhile advancing agendas that run counter to U.S. interests.
ll

A major emphasis of effecting this change must be the addition of a large
new cadre of U.S. professionals and contractors at these international
financial institutions.
The U.S. must insist on the hiring and support of this human capital as acondition to future funding.

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The U.S. should also examine increasing or decreasing its ownership levelsin these institutions in order to achieve maximum leverage.

CHINA AND OTHER GEOPOLITICAL THREATS

Committee on Foreign Investment in the United States. The interagency
Committee on Foreign Investment in the United States should realign its priorities
to meet the United States’ current foreign policy threats, especially from China.
On October 20, 2022, the Treasury Department, which chairs CFIUS, adopted
the first-ever CFIUS Enforcement and Penalty Guidelines50 on the committee’snational security risk mitigation requirements. However, there are no clear rulesthat guide CFIUS on mitigation monitoring, nor is there a published penalty schedule to standardize accountability when CFIUS pursues a civil money penalty for
violators. In addition, Treasury—as chair of the committee—runs an opaque process that biases committee procedure toward corporate interests and away fromnational security interests. Finally, the committee’s jurisdiction does not extend
over greenfield investments that Chinese state-owned enterprises have historicallypursued in the United States, which leaves America vulnerable to an instrumentof Chinese economic statecraft.
Given these issues, the next steps for CFIUS should be to develop a more
coherent—and transparent—mitigation monitoring program to complement theenforcement guidelines, give CFIUS agencies in charge of national security concerns an equal voice at the table, and petition Congress to amend the law to cover
Chinese greenfield investments.
CFIUS should publish a penalty schedule for violations of CFIUS reporting andmitigation requirements. Publishing a penalty schedule for CFIUS violations will
reduce the discretion of the committee to waive penalties or impose mere “wrist
slap” costs on violators of the law. Additionally, a standardized penalty schedulewould likely increase the deterrence of CFIUS enforcement by reducing the perception among parties to covered transactions that they can avoid enforcementby the committee or secure special exceptions based on appeals to the committee’s discretion.
As a legal matter—and in application by CFIUS—mitigation monitoring has
developed as the Wild West. There are no clear rules that guide the entire committee on mitigation monitoring, nor is there the same level of oversight or
accountability within and among the agencies as applies when CFIUS reviewsa transaction or when it pursues a civil money penalty. Indeed, it is a credit totransaction parties and the professionalism of the governmental officials and contractors who conduct mitigation monitoring on behalf of the government that, by
and large, mitigation monitoring has worked adequately during the last several
decades. But dependency on the personality and capabilities of individuals creates
unnecessary risk both for CFIUS and for transaction parties.

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Congress should make the Department of Defense (DOD) a CFIUS co-chairwith the Department of Treasury. Making DOD an official CFIUS co-chair alongwith Treasury will establish a balanced committee process by elevating national
security interests to an equal stature. The committee is currently imbalanced
toward the interests of corporate America because Treasury is the sole chair of
CFIUS and, in practice, runs a process that is not fully transparent and which biases
it from the national security interests represented by DOD and the Intelligence
Community (IC).
For example, Treasury representatives will consult with the Commerce Department and the United States Trade Representative—which tend to favor permitting
covered transactions to occur with little to no mitigation requirements—and these
representatives will then obscure the results and purposes of such sidebar meetings from DOD and IC representatives. This hampers DOD, IC, and sometimes
even State Department representatives from full participation in the process orfrom advocating national security interests as well as they should.
Greenfield Investments. Congress should close the loophole on greenfield
investments and require CFIUS review of investments in U.S.-based greenfield
assets by Chinese-controlled entities to assess any potential harm to U.S. nationaland economic security. In the 2018 Foreign Risk and Review Modernization Act(FIRRMA),51 one important category of foreign transactions left out of the bill was
greenfield investments, particularly by Chinese state-owned enterprises (SOEs).
Greenfield investments by Chinese SOEs pose a unique threat, and they should be
met with the highest scrutiny by all levels of government.
Greenfield investments result in the control of newly built facilities in the U.S.,
and they were not addressed in FIRRMA primarily because governors and state
governments embrace them. That is understandable; they typically bring thepromise of creating American jobs. However, the goal of such Chinese SOEs is tosiphon assets, technological innovation, and influence away from U.S. businesses
in order to expand the global presence of the Chinese Communist Party. While theChinese government keeps its domestic markets largely insulated from foreign
influence, it regularly invests in the U.S. and other countries under the “greenfield” model. Firms fully owned by China’s Communist regime are increasingly
buying land, building factories, and taking advantage of state and local tax breaks
on American soil.
Treasury should examine creating a school of financial warfare jointly with
DOD. If the U.S. is to rely on financial weapons, tools, and strategies to prosecuteinternational defensive and offensive objectives, it must create a specially trainedgroup of experts dedicated to the study, training, testing, and preparedness of these
deterrents. Recent experience has demonstrated that the U.S. cannot depend on
the rapid development and deployment of untested, academically developed financial actions, stratagems, and weapons on an ad hoc basis.

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Treasury must also seriously evaluate U.S. foreign direct investment in China.
Particular focus should be paid to investments in CCP or other state-owned enterprises, investments that result in technology transfers from the U.S. to China,
investments that enhance China’s military capacity, and investments that poserisks to critical U.S. supply chains by sourcing critical components or feedstocks
in China. An enhanced reporting system is warranted, and greater legal authority
and restrictions are appropriate.
IMPROVED FINANCIAL REGULATION

One of the priorities of the incoming Administration should be to restructure
the outdated and cumbersome financial regulatory system in order to promote
financial innovation, improve regulator efficiency, reduce regulatory costs, close
regulatory gaps, eliminate regulatory arbitrage, provide clear statutory authority,
consolidate regulatory agencies or reduce the size of government, and increasetransparency.
Merging Functions. The new Administration should establish a more streamlined bank and supervision by supporting legislation to merge the Office of theComptroller of the Currency, the Federal Deposit Insurance Corporation, theNational Credit Union Administration, and the Federal Reserve’s non-monetary
supervisory and regulatory functions.
U.S. banking law remains stuck in the 1930s regarding which functions financial companies should perform. It was never a good idea either to restrict banks
to taking deposits and making loans or to prevent investment banks from taking
deposits. Doing so makes markets less stable. All financial intermediaries function
by pooling the financial resources of those who want to save and funneling themto others that are willing and able to pay for additional funds. This underlying
principle should guide U.S. financial laws.
Policymakers should create new charters for financial firms that eliminate activity restrictions and reduce regulations in return for straightforward higher equity
or risk-retention standards. Ultimately, these charters would replace government
regulation with competition and market discipline, thereby lowering the risk of
future financial crises and improving the ability of individuals to create wealth.
Dodd–Frank Revisions. Congress should repeal Title I, Title II, and Title VIIIof the Dodd–Frank Act.52 Title I of Dodd–Frank created the Financial Stability
Oversight Council, a kind of super-regulator tasked with identifying so-calledsystemically important financial institutions and singling them out for especiallystringent regulation. The problem, of course, is that this process effectively identifies those firms regulators believe are “too big to fail.”53
Title VIII of Dodd–Frank gives the FSOC similarly broad special-designation
authority for specialized financial companies known as financial market utilities.54
Title II of Dodd–Frank established the controversial provision known as orderly— 705 —

Mandate for Leadership: The Conservative Promise

liquidation authority (OLA), the law’s alternative to bankruptcy for large financial
firms. OLA was based on the faulty premise that large financial institutions cannot
fail in a judicial bankruptcy proceeding without causing a financial crisis. It gives
such companies access to subsidized funding and creates incentives for management to overleverage and expand high-risk investments.55 Congress should repeal
each of these provisions to guard against bailouts and too-big-to-fail problems.56
Treasury plays a role in funding the conservatorships of Fannie Mae and Freddie
Mac. It should work to end the conservatorships and move toward privatization ofthese massive housing finance agencies. This would restore a sustainable housing
finance market with a robust private mortgage market that does not rely on explicit
or implicit taxpayer guarantees.
Direct government ownership has worsened the risks that government-sponsored enterprises (GSEs) pose to the mortgage market, and stock sales and otherreforms should be pursued. Treasury should take the lead in the next President’s
legislative vision guided by the following principles:
l

l

l

l

Fannie Mae and Freddie Mac (both GSEs) must he wound down in anorderly manner.
The Common Securitization Platform57 should be privatized andbroadly available.
Barriers to private investment must be removed to pave the way for a robust
private market.
The missions of the Federal Housing Administration and the Government
National Mortgage Association (“Ginnie Mae“) must he right-sized to servea defined mission.

ANTI-MONEY LAUNDERING AND BENEFICIALOWNERSHIP REPORTING REFORM

The Financial Crimes Enforcement Network is a relatively small bureau within
the Treasury Department with approximately 285 employees and a FY 2022 budgetof $173 million.58 Although FinCEN makes a significant contribution to law enforcement efforts, it also does demonstrable, substantial and widespread economic harmbecause it: (1) is largely oblivious to those adverse economic effects; (2) conducts
almost no meaningful cost-benefit analysis or retrospective review of regulations;(3) has been subject to extraordinarily lax oversight by both Congress and the Treasury Department; and (4) demands total transparency by those it regulates but isitself disturbingly and purposefully opaque. For example, FinCEN no longer issues
an annual report59 and no longer publishes cash transaction report (CTR) data.

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There were 2 .7 million suspicious activity reports (SARs) filed in 2021.60 The
number of CTRs filed were approximately 10 times that number.61 In 2014, FinCEN
anti-money laundering/countering the financing of terrorism (AML-CFT) rules
cost an estimated $5 billion to $8 billion per year.62 Undoubtedly, this cost is now
substantially higher both because of inflation and because the rules have become
more onerous.63 Yet there is little evidence that this massive expenditure ofresources is doing much good,64 and there is no evidence regarding which aspectsof the AML-CFT regime are effective and which are not. The AML-CFT regime is amajor contributing factor causing the decline in the number of small broker-dealers and the decline in the competitiveness of community banks.
Congress must require FinCEN to annually publish data regarding:l

The number of SARs filed;l

The number of CTRs filed;65

l

l

l

l

The number of AML-CFT prosecutions, disaggregating those in which the
AML-CFT prosecution is stand-alone and in which the prosecution is an
add-on count connected to other predicate crime;66
The number of AML-CFT convictions (similarly disaggregated);
The number and aggregate amount of AML-CFT fines imposed and the typeof institution upon which the fine was imposed; andAnnual estimates of the aggregate costs imposed on private entities by the
AML-CFT regime.67

Without this data, it is impossible for policymakers to make an informed judgment about the effectiveness of the AML-CFT regime. Congress should also require
both FinCEN and the Government Accountability Office to undertake separate
evaluations regarding which aspects of the AML-CFT regime are effective andwhich are not. FinCEN should be required to undertake a thorough retrospective review of its regulations and various statutory requirements and report toCongress on its findings in a publicly available report. Anecdotes and assurancesfrom FinCEN staff that all is well—but that even more onerous requirements areneeded—are not enough.
Congress should repeal the Corporate Transparency Act, and FinCEN should
withdraw its poorly written and overbroad beneficial ownership reporting rule.
Both are targeted at the smallest businesses in the U.S. (those with 20 or fewer
employees) and will do nothing material to impede criminal finance.68 The FinCEN— 707 —

Mandate for Leadership: The Conservative Promise

beneficial ownership reporting rule will impose costs exceeding $1 billion annually and is exceedingly poorly drafted.69 FinCEN itself estimates that more than
33 million businesses will be affected and that costs will be $547 million to $8.1
billion annually.70
THE “EQUITY” AGENDA

Under the Biden Administration, the Treasury Department has appointed aCounselor for Racial Equity, established an Advisory Committee on Racial Equity,and created an office for Diversity, Equity, Inclusion, and Accessibility. All theseshould be eliminated. Treasury has created several new offices to promote “equity”
and has made this its first of five strategic goals in its Fiscal Year 2022–2226
Strategic Plan. “Equity” is identified as a cross-cutting theme in 15 of 19 of theplan’s objectives.
The avowed purpose of these initiatives is to implement policies that deliberately favor some races or ethnicities over others. The casual acceptance andrapid spread of racist policymaking in the federal government must be forcefully
opposed and reversed. The next conservative Administration should take affirmative steps to expose and eradicate the practice of critical race theory and diversity,
equity, and inclusion (DEI) throughout the Treasury Department.
These steps will include:
l

l

l

l

Identify every Treasury official who participated in DEI initiatives andinterview him or her for the purpose of determining the scope and nature ofthese initiatives and to ensure that such initiatives are completely ended.
Make public immediately all communications relating to the work of theTreasury’s critical race theory and DEI initiatives.
Treat the participation in any critical race theory or DEI initiative,
without objecting on constitutional or moral grounds, as per se grounds fortermination of employment.
Expose and make public all training materials and initiatives designed tosingle out any race, ethnicity, or sex for special treatment.

The Administration should eliminate the 25-member Treasury Advisory Committee on Racial Equity.
CLIMATE-RELATED FINANCIAL RISK

Treasury has created a new departmental office, “Climate Hub,” and has made“combating climate change” one of the Biden Treasury Department’s top five

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2025 Presidential Transition Projectprincipal goals. The next Administration should eliminate the Climate Hub Office
and withdraw from climate change agreements that are inimical to the prosperityof the United States.
The Climate Hub office “coordinates Treasury’s work to inform, guide, incentivize, and mobilize financial flows for climate mitigation and climate adaptationand supports the broader alignment of the financial system with a path to netzero emissions by mid-century.“71 According to the Biden Administration’s Fiscal
Year 2022–2026 Strategic Plan for Treasury, the fourth of five Treasury strategic
goals reads:
Combat Climate Change
The United States and the world face a climate crisis and a narrowing
window of action to avoid the worst impacts of climate change. At the sametime, the transition to a low carbon economy represents a historic economic
opportunity for the U.S. and global economy. The U.S. federal government
must work alongside our domestic and international partners to respond
ambitiously to tackle the challenges of climate change, adapt to an alreadychanging climate, mitigate the risks, and position the global economy forclean and sustainable growth.72

Yet history shows that economic growth and technological/scientific advancethrough human ingenuity are by far the best ways to prevent and mitigate extreme
weather events. Moreover, virtually all of the initiatives that the Biden Administration has adopted would, even if successful, have a de minimis impact on changing
global weather patterns, in part because most nations—notably China—are notcooperating with climate summits and international agreements. Virtually all
nations, for example, that signed the Paris Agreement73 have not met their treaty
obligations. Such routinely violated treaties weaken the U.S. economy with no offsetting societal benefits. To that end, the next conservative Administration should
withdraw the U.S. from the U.N. Framework Convention on Climate Change74 andthe Paris Agreement.
The next Administration should use Treasury’s tools and authority to promote
investment in domestic energy, including oil and gas. It should reverse support forinternational public- (and private-) based efforts promoting Environmental, Social,and Governance75 and Principles for Responsible Investment,76 both of which havebadly damaged U.S. energy security.
OTHER REFORMS

U.S. Coast Guard and the Bureau of Alcohol, Tobacco, Firearms, andExplosives. Congress should examine whether to return the Treasury’s former— 709 —

Mandate for Leadership: The Conservative Promise

in-house law enforcement capabilities via the return of the United States Coast
Guard and the Bureau of Alcohol, Tobacco, Firearms, and Explosives. Bringing
these agencies back from the Department of Homeland Security and the Department of Justice, respectively, would allow Treasury, in the case of U.S. Coast Guard,
to increase border security via a vigilance with respect to economic crimes (forexample, drug smuggling and tax evasion).
U.S. Trade and Development Agency. Congress should eliminate the U.S.
Trade and Development Agency (USTDA). The USTDA is intended to help companies create U.S. jobs through the export of U.S. goods and services for priority
development projects in emerging economies. The USTDA links U.S. businesses
to export opportunities by funding project planning activities, pilot projects, andreverse-trade missions while creating sustainable infrastructure and economic
growth in partner countries.
These activities more properly belong to the private sector. The best way topromote trade and development is to reduce tariff and non-tariff trade barriers.
Another way is to reduce the federal budget deficit, and thereby federal borrowing
from abroad, freeing more foreign dollars to be spent on U.S. exports instead offederal treasury bonds.
Other Issues. Many Treasury Department issues cut across multiple parts ofTreasury or other governmental agencies. Several are discussed in this chapter,but not all can be covered here in depth. Other issues of concern include China,
cybersecurity, digital assets, digital services taxes, international debt defaults, Iran,Social Security and Medicare Trust Funds and private sector pensions, sanctions
policy, and treasury auction and debt issuance.

AUTHORS’ NOTE: The preparation of this chapter was a collective enterprise of individuals involved in the2025 Presidential Transition Project. All contributors to this chapter are listed at the front of this volume, but Monica
Crowley, Tom Dans, John Berlau, Austin Bramwell, Preston Brashers, Alexandra Harrison Gaiser, Nathan Hitchen,
Adam Korzeniewski, and Jonathan Moy deserve special mention. The authors alone assume responsibility for thecontent of this chapter, and no views expressed herein should be attributed to any other individual.

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2025 Presidential Transition Project
ENDNOTES

1.

2.

3.

4.
5.
6.
7.
8.
9.
10.
11.
12.
13.

14.

15.

16.

EJ Antoni, “Biden Keeps Making Claims About the Economy That Just Aren’t True. These Facts Don’t Lie,”
Heritage Foundation Commentary, February 8, 2023, https://www.heritage.org/markets-and-finance/
commentary/biden-keeps-making-claims-about-the-economy-just-arent-true-these.
“Fidelity 2022 Retirement Analysis: In the Midst of Inflation and Uncertainty, Retirement Account Balances
Are Rising,” table, “Average Retirement Account Balances,” February 23, 2023, https://newsroom.fidelity.com/
pressreleases/fidelity--2022-retirement-analysis--in-the-midst-of-inflation-and-uncertainty--retirementaccount-ba/s/095bb4a8-cf3a-484e-a911-bc0c61c460ff (accessed March 22, 2023).
See U.S. Department of the Treasury, Fiscal Year 2022–2026 Strategic Plan and Budget Request for FY 2023,
2022, https://home.treasury.gov/system/files/266/COMBINED-CJ-Web-Version-FY-2023.pdf (accessed
March 18, 2023).
U.S. Department of the Treasury, Agency Financial Report: Fiscal Year 2015, November 16, 2015, p.4 https://home.treasury.gov/system/files/266/AFR-FY15-508.pdf (accessed March 19, 2023).
Domestic Finance, U.S. Department of the Treasury https://home.treasury.gov/about/offices/domestic-finance.
U.S. Constitution, art. I, sec. 9.
Ibid., p. ES 1.
Including direct and reimbursable employees. See ibid., “Fiscal Year Comparison of Full-Time Equivalent (FTE)
Staffing (Direct and Reimbursable),” p. ES 4.
U.S. Department of the Treasury, “Offices,” https://home.treasury.gov/about/offices (accessed March 18, 2023).
U.S. Department of the Treasury, “Bureaus,” https://home.treasury.gov/about/bureaus (accessed
March 18, 2023).
U.S. Department of the Treasury, Office of the Inspector General, “Overview,” https://oig.treasury.gov(accessed March 19, 2023).
William M (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021, Public Law 116–283,§§ 6001–6511.
See, for example, Timothy Vermeer, “The Impact of Individual Income Tax Changes on Economic Growth,” Tax
Foundation Fiscal Fact No. 793, June 2022, https://files.taxfoundation.org/20220610142519/The-Impact-ofIndividual-Income-Tax-Changes-on-Economic-Growth-2.pdf (accessed March 18, 2023), and Karel Mertens
and José Luis Montiel Olea, “Marginal Tax Rates and Income: New Time Series Evidence,” Quarterly Journal of
Economics, Vol. 133, No. 4 (November 2018), pp. 1803–1884.
The current tax system is not neutral toward investment. This neutrality criterion is sometimes expressed as
ensuring that the private rate of return equals the social rate of return, that the tax system does not raise theuser cost of capital, that all factor incomes are taxed once and equally, that the tax system defines income
properly, or that the tax is a consumption tax. For the basic user cost of capital analysis with taxes, see Robert
E. Hall and Dale W. Jorgenson, “Tax Policy and Investment Behavior,” American Economic Review, Vol. 57, No.
3 (June, 1967), pp. 391–414, https://web.stanford.edu/~rehall/Tax-Policy-AER-June-1967.pdf (accessed March
19, 2023). See also Kevin A. Hassett and Kathryn Newmark, “Taxation and Business Behavior: A Review of the
Recent Literature,” in John W. Diamond and George R. Zodrow, eds., Fundamental Tax Reform: Issues, Choices,and Implications (Cambridge, MA: MIT Press, 2008), and Alan J. Auerbach, “Taxation and Capital Spending,”
University of California, Berkeley, September 2005, http://eml.berkeley.edu//~auerbach/capitalspending.pdf(accessed March 19, 2023).
Scott A. Hodge, “The Compliance Costs of IRS Regulations,” Tax Foundation Fiscal Fact No. 512, June 2016,
https://files.taxfoundation.org/legacy/docs/TaxFoundation_FF512.pdf (accessed March 19, 2023), and Jason J.
Fichtner and Jacob M. Feldman, “The Hidden Costs of Tax Compliance,” Mercatus Center, May 20, 2013, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2267971 (accessed March 19, 2023).
In formal terms, tax policy should seek to minimize the excess burden or deadweight loss of the tax system.
See John Creedy, “The Excess Burden of Taxation and Why it (Approximately) Quadruples When the Tax
Rate Doubles,” New Zealand Treasury Working Paper No. 03/29, December 2003, https://www.econstor.eu/
bitstream/10419/205534/1/twp2003-29.pdf (accessed March 19, 2023). See also, for example, N. Gregory
Mankiw, Principles of Economics, 4th ed. (South-Western College Pub, 2006), ch. 8, or many other textbooks
on price theory, microeconomics, or principles of economics.

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Mandate for Leadership: The Conservative Promise
17. For a detailed discussion, see David R. Burton, “Tax Reform: Eliminating the Double Taxation of Corporate
Income,” Heritage Foundation Backgrounder No. 3216, May 18, 2017, https://www.heritage.org/sites/default/
files/2017-05/BG3216.pdf.
18. One hundred dollars in corporate income less an 18 percent tax leaves $82. A 15 percent capital gains tax or
qualified dividends tax is $12.30, which leaves $69.70, for an effective marginal tax rate of 30 percent. This, ofcourse, abstracts away from certain timing issues.
19. Inflation Reduction Act, Public Law 117–169.
20. Ibid.
21. Tax Cuts and Jobs Act, Public Law 115–97, § 11061, amending Internal Revenue Code § 2010(c). The amounts
before inflation adjustments are $5 million and $10 million, respectively. See also Internal Revenue Service,“What’s New: Estate and Gift Tax, Basic Exclusion Amount for Year of Death,” https://www.irs.gov/businesses/
small-businesses-self-employed/whats-new-estate-and-gift-tax (accessed March 22, 2023).
22. The effective tax rate on foreign-derived intangible income should remain equal to the tax rate on global
intangible low-taxed income.
23. For miscellaneous itemized deductions, see Internal Revenue Code (26 U.S. Code § 67). Business deductions
that were suspended by the 2017 tax bill (other than those related to depreciation) should also be extended.
This includes the local lodging expense deduction and entertainment expense deductions. The 2017 tax bill’s
modifications to the deduction for personal casualty and theft losses should be made permanent. The Pease
limitation on itemized deductions should be permanently eliminated.
24. Bonus depreciation provisions applied to specific industries should be maintained.
25. Employer-provided childcare expenses should also count toward the limitation on benefit deductions.
26. HSAs are flexible and portable, and they help contain costs by giving health care consumers skin in the game.
27. For additional revenue to fund pro-growth tax cuts, lawmakers could gradually phase down the limitation on
benefit deductions.
28. Early versions of the 2017 tax bill envisioned reforming the corporate income tax into a destination-based
cash flow tax, a form of consumption tax. A tax system that taxes labor and capital-factor incomes equally—
and only once—results in higher output and higher incomes. Usually, in the modern public finance literature,
this is called a consumption tax. On the economic superiority of consumptions taxes, see N. Gregory Mankiw
et al., “Optimal Taxation in Theory and Practice,” Journal of Economic Perspectives, Vol. 23, No. 4 (2009), pp.
147–174, https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.23.4.147 (accessed March 19, 2023); Alan J. Auerbach,“The Choice Between Income and Consumption Taxes: A Primer,” NBER Working Paper No. 12307, June 2006,
https://www.nber.org/system/files/working_papers/w12307/w12307.pdf (accessed March 19, 2023); andCharles E. Walker and Mark A. Bloom eld, eds., The Consumption Tax: A Better Alternative? (Cambridge, MA:
Harper and Row, Ballinger, 1987).
29. Hoover Institution, “Simplifying the Tax System: The History of the Flat Tax,” March 1, 2019, https://www.
hoover.org/research/simplifying-tax-system-history-flat-tax (accessed March 20, 2023).
30. David R. Burton, “Four Conservative Tax Plans with Equivalent Economic Results,” Heritage Foundation
Backgrounder No. 2978, December 7, 2022, https://www.heritage.org/taxes/report/four-conservative-taxplans-equivalent-economic-results. Consumption tax plans generally include carveouts that exempt very
low-income Americans from federal tax liability.
31. Daniel J. Mitchell and Chris Edwards, Global Tax Revolution: The Rise of Tax Competition and the Battle to
Defend It (Washington, DC: Cato Institute, 2008); Preston Brashers, “Like Constitutional Checks and Balances,
Tax Competition Is a Bulwark Against Growth of Government,” March 17, 2022, https://www.heritage.org/
taxes/commentary/constitutional-checks-and-balances-tax-competition-bulwark-against-growth (accessed
March 19, 2023).
32. James M. Robers et al., “Organization for Economic Co-operation and Development (OECD): What America
Should Do,” Heritage Foundation Backgrounder No. 3593, March 16, 2021, https://www.heritage.org/
sites/default/files/2021-03/BG3593.pdf; Preston Brashers. “The OECD Crusade To Raise Taxes,” Heritage
Foundation Commentary, February 4, 2022, https://www.heritage.org/taxes/commentary/the-oecd-crusaderaise-taxes; David Burton, “How the OECD is Promoting More Identity Theft, Crime, Industrial Espionage, andSuppression of Political Dissidents,” July 15, 2016, Heritage Foundation Commentary, https://www.heritage.
org/taxes/commentary/how-the-oecd-promoting-more-identity-theft-crime-industrial-espionage-and;— 712 —

2025 Presidential Transition Project

33.
34.

35.

36.
37.

38.

39.

40.
41.
42.

43.

44.

45.
46.
47.
48.

David R. Burton “Towards a Global Tax Cartel?” Policy, Vol. 18, No. 4 (Summer 2002–2003), Center for
Independent Studies (Australia), https://www.cis.org.au/wp-content/uploads/2015/04/images/stories/policymagazine/2002-summer/2002-18-4-david-r-burton.pdf (accessed March 19, 2023).
Roberts et al., “Organization for Economic Co-operation and Development (OECD).”
See Inflation Reduction Act, § 10301. See also Preston Brashers, “IRS and Allies Downplay 87,000-Person
Hiring Binge,” The Daily Signal, August 12, 2022, https://www.dailysignal.com/2022/08/12/the-irs-and-itsallies-downplay-87000-person-hiring-binge/ (accessed March 19, 2023).
U.S. Department of the Treasury, General Explanations of the Administration’s Fiscal Year 2022 Revenue
Proposals, May 2021, pp. 88–89, https://home.treasury.gov/system/files/131/General-Explanations-FY2022.pdf(accessed March 19. 2023).
See U.S. Department of the Treasury, Fiscal Year 2022–2026 Strategic Plan.
U.S. House of Representatives, Committee on Oversight and Reform, Policy and Supporting Positions,
December 2020 (the “plumb book”), p. 127 https://www.govinfo.gov/content/pkg/GPO-PLUMBOOK-2020/
pdf/GPO-PLUMBOOK-2020.pdf (accessed March 19, 2023).
Internal Revenue Service, “Organization and Top Officials,” https://www.irs.gov/pub/newsroom/marketing/internet/irs-organization-chart.pdf (accessed March 19, 2023). See also Internal Revenue Code (26 U.S. Code §7803(a)–(b)).
For a summary of various GAO reports on various IRS IT problems, see Vijay A. D’Souza, “Information
Technology: IRS Needs to Address Operational Challenges and Opportunities to Improve Management,”
testimony before the Subcommittee on Government Operations, Committee on Oversight and Reform,
U.S. House of Representatives, October 7, 2020, GAO–21–178T, https://www.gao.gov/assets/gao-21-178t.
pdf (accessed March 19, 2023). Charles O. Rossotti was named IRS Commissioner by President Bill Clinton
primarily so that Rossotti could address widely acknowledged IT issues. He made some improvements
between 1997 and 2002, but despite large investments, he did not really resolve the IT problems at the IRS.
Since that time, the problems have worsened.
D’Souza, “Information Technology,” figure 1, p. 5.
Internal Revenue Service, IRS Integrated Modernization Business Plan, April 2019, https://www.irs.gov/pub/
irs-pdf/p5336.pdf (accessed March 20, 2023).
See, for example, the Omnibus Taxpayers’ Bill of Rights, Public Law 100–647, Subtitle J of Title VI of
the Technical and Miscellaneous Revenue Act of 1988; Taxpayer Bill of Rights 2, Public Law 104–168; IRS
Restructuring and Reform Act of 1998, Public Law 105–206, Title III; Consolidated Appropriations Act, Public
Law 114–113, Title IV, Subtitle A (adding Internal Revenue Code § 7803(a)(3) and other changes); and Taxpayer
First Act, Public Law 116–25, Title I.
For a list of 68 proposed reforms, see National Taxpayer Advocate, 2022 Purple Book: Compilation ofLegislative Recommendations to Strengthen Taxpayer Rights and Improve Tax Administration, December 31,
2021, https://www.taxpayeradvocate.irs.gov/wp-content/uploads/2022/01/ARC21_PurpleBook.pdf (accessed
March 19, 2023). Most, though not all, of these proposals have merit. Regarding penalty reform, see Jeremiah
Coder, “Achieving Meaningful Civil Tax Penalty Reform and Making It Stick,” Akron Tax Journal, Vol. 27 (2012),
https://ideaexchange.uakron.edu/cgi/viewcontent.cgi?article=1153&context=akrontaxjournal (accessed
March 19, 2023).
Internal Revenue Service, 2023 Congressional Budget Justification & Annual Performance Report andPlan, Rev. 3–2022, https://home.treasury.gov/system/files/266/Internal-Revenue-Service-FY-2023-CJ.pdf(accessed March 19, 2023).
Internal Revenue Service, 2021 IRS Data Book: October 1, 2020 to September 30, 2021, table 11, p. 26, https://www.irs.gov/pub/irs-pdf/p55b.pdf (accessed March 19, 2023).
Ibid., 2021 IRS Data Book, table 2, p. 4.
Scott A. Hodge, “The Compliance Costs of IRS Regulations, Tax Foundation Fiscal Fact No. 512, June 2016
https://files.taxfoundation.org/legacy/docs/TaxFoundation_FF512.pdf (accessed March 19, 2023).
Organization for Economic Cooperation, The Multilateral Convention on Mutual Administrative Assistancein Tax Matters: Amended by the 2010 Protocol, https://read.oecd-ilibrary.org/taxation/the-multilateralconvention-on-mutual-administrative-assistance-in-tax-matters_9789264115606-en#page1 (accessed
March 20, 2023).

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Mandate for Leadership: The Conservative Promise
49. David Burton, “Two Little Known Tax Treaties Will Lead to Substantially More Identity Theft, Crime, Industrial
Espionage, and Suppression of Political Dissidents,” Heritage Foundation Backgrounder No. 3087, December
21, 2015 file:///C:/Users/DRBar/Downloads/BG3087-3.pdf.
50. U.S. Department of the Treasury, “CFIUS Enforcement and Penalty Guidelines,” https://home.treasury.
gov/policy-issues/international/the-committee-on-foreign-investment-in-the-united-states-cfius/cfiusenforcement-and-penalty-guidelines (accessed March 20, 2023).
51. John S. McCain National Defense Authorization Act for Fiscal Year 2019, Public Law 115–232. Title XVII, https://home.treasury.gov/sites/default/files/2018-08/The-Foreign-Investment-Risk-Review-Modernization-Act-of2018-FIRRMA_0.pdf (accessed March 20, 2023).
52. Dodd–Frank Wall Street Reform and Consumer Protection Act, Public Law 111–203.
53. Peter J. Wallison, “Title I and the Financial Stability Oversight Council,” in Norbert Michel, ed., The Case
Against Dodd–Frank: How the “Consumer Protection” Law Endangers Americans, https://www.heritage.org/
government-regulation/report/the-case-against-dodd-frank-how-the-consumer-protection-law-endangers.
54. Norbert J. Michel, “Fixing the Dodd–Frank Derivatives Mess: Repealing Titles VII and VIII,” in Norbert Michel,ed., The Case Against Dodd–Frank: How the “Consumer Protection” Law Endangers Americans, Heritage
Foundation, https://www.heritage.org/government-regulation/report/the-case-against-dodd-frank-how-theconsumer-protection-law-endangers.
55. Paul Kupiec, “Title II: Is Orderly Liquidation Authority Necessary to Fix ‘Too Big to Fail’?” in Michel, The Case
Against Dodd–Frank.
56. Norbert J. Michel, “Money and Banking Provisions in the Financial CHOICE Act: A Major Step in the Right
Direction,” in Prosperity Unleashed: Smarter Financial Regulation (Washington, DC: The Heritage Foundation,2017), https://www.heritage.org/prosperity-unleashed#:~:text=Smarter%20financial%20regulations%3A%20
solutions%20to,and%20accountable%20than%20ever%20before.
57. Federal Housing Finance Agency, “Single Security Initiative and Common Securitization Platform,” https://www.fhfa.gov/PolicyProgramsResearch/Policy/Pages/Securitization-Infrastructure.aspx (accessed
March 20, 2023).
58. U.S. Department of the Treasury, Financial Crimes Enforcement Network, Congressional Budget Justification
and Annual Performance Plan and Report, FY 2023, Table 1.1, p. 3, https://home.treasury.gov/system/
files/266/13.-FinCEN-FY-2023-CJ.pdf (accessed March 19, 2023).
59. See Financial Crimes Enforcement Network, “Annual Report,” https://www.fincen.gov/annual-report (accessed
March 19, 2023).
60. Financial Crimes Enforcement Network, “Suspicious Activity Report Statistics (SAR Stats),” https://www.fincen.
gov/reports/sar-stats (accessed March 19, 2023).
61. David R. Burton and Norbert J. Michel, “Financial Privacy in a Free Society,” Heritage Foundation
Backgrounder No. 3157, September 23, 2016, table 1, p. 10, http://thf-reports.s3.amazonaws.
com/2016/BG3157.pdf.
62. Ibid., table 2, p. 11.
63. A recent report showed that just 14 surveyed financial institutions spent $2.4 billion on AML/CFT compliance.
Bank Policy Institute, “Getting to Effectiveness: Report on U.S. Financial Institution Resources Devoted to
BSA/AML & Sanctions Compliance,” October 29, 2018, p. 4, https://bpi.com/wp-content/uploads/2018/10/
BPI_AML_Sanctions_Study_vF.pdf (accessed March 19, 2023).
64. Burton and Michel, “Financial Privacy in a Free Society;” Norbert J. Michel and Jennifer J. Schulp, “Revising
the Bank Secrecy Act to Protect Privacy and Deter Criminals,” Cato Institute Policy Analysis No. 932, July 26,
2022 , https://www.cato.org/sites/cato.org/files/2022-07/PA_932_2.pdf (accessed March 19, 2023); Michael
Levi and Peter Reuter, “Money Laundering,” Crime and Justice: A Review of Research, Vol. 34 (2006); andMariano-Florentino Cuellar, “The Tenuous Relationship between the Fight Against Money Laundering andthe Disruption of Criminal Finance,” Journal of Criminal Law and Criminology, Vol. 93, No. 2 (Winter 2003)
https://scholarlycommons.law.northwestern.edu/cgi/viewcontent.cgi?article=7123&context=jclc (accessed
March 19, 2023).
65. This would be in cooperation with the IRS because Form 8300 is a joint IRS-FinCEN endeavor.
66. This data, as well as AML-CFT convictions, would published be in cooperation with the U.S.
Department of Justice.

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67. On banks, credit unions, broker-dealers, and other financial institutions as normally understood, but note that
31 U.S. Code §5312(a)(2) also defines “financial institutions” to include money service businesses; insurancecompanies; jewelers; pawnbrokers; travel agencies; dealers in automobiles, airplanes, and boats; persons
involved in real estate closings and settlements; casinos; and telegraph companies.
68. David R. Burton, “The Corporate Transparency Act and the ILLICIT CASH Act,” Heritage Foundation
Backgrounder No. 3449, November 7, 2019, https://www.heritage.org/sites/default/files/2019-11/BG3449_0.
pdf, and David R. Burton to AnnaLou Tirol, Financial Crimes Enforcement Network, “Re: Beneficial Ownership
Information Reporting Requirements,” Comment, May 5, 2021 http://thf_media.s3.amazonaws.com/2022/
Regulatory_Comments/FINCEN-2021-0005-0132_attachment_1.pdf (accessed March 19, 2023).
69. Burton comment, ibid.
70. Federal Register, Vol. 87, No. 189, September 30, 2022, pp. 59498–59596.
71. U.S. Department of the Treasury, Fiscal Year 2022–2026 Strategic Plan.
72. Ibid.
73. United Nations, “Paris Agreement,” 2015, https://unfccc.int/files/essential_background/convention/
application/pdf/english_paris_agreement.pdf (accessed March 20, 2023).
74. United Nations, “United Nations Framework Convention on Climate Change,” GE.5–62220, 1992, https://unfccc.
int/resource/docs/convkp/conveng.pdf (accessed March 20, 2023).
75. “What Is ESG?” ESG Hurts, https://esghurts.com/ (accessed March 22, 2023), and Samuel Gregg, “WhyBusiness Should Dispense with ESG,” American Institute for Economic Research, December 4, 2022, https://www.aier.org/article/why-business-should-dispense-with-esg/ (accessed March 22, 2023).
76. PRI Association, “What are the Principles for Responsible Investment?” https://www.unpri.org/about-us/
what-are-the-principles-for-responsible-investment (accessed March 22, 2023). The PRI Association is a U.N.affiliated non-governmental organization. See also PRI Association, “Articles of Association of PRI Association,”
Art. 9, November 14, 2016, https://d8g8t13e9vf2o.cloudfront.net/Uploads/g/e/r/2016-11-14-Articles-ofAssociation-of-PRI-Association-.pdf (accessed March 22, 2023).

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