When Sol Coffino received TEI’s Honorary Membership Award at the Annual Conference in Chicago, he reminded the group that the Institute did not start meeting annually with the Treasury Department’s Office of Tax Policy until his term as 1982-1983 President. That’s not to say that TEI did not occasionally venture into tax policy discussions in the United States before the 1980s. We did, not only in our discussions with the Internal Revenue Service but also with the Treasury Department. The first recorded instance of TEI’s involvement that the Institute’s staff could document was less than two years after our founding, when the Treasury Department asked for TEI’s help in revising the Corporate Income Tax Form. Two years later, in 1948, TEI was asked to testify before the Senate Committee on Appropriations against proposed cuts in the Bureau of Internal Revenue’s staff.
The Roots of TEI’s Advocacy Policy
Such interactions, however, were rare, and the Institute always moved cautiously in the advocacy arena. Our 1948 testimony, for example, did not proceed until the Board of Directors polled the entire membership. While there were occasional forays into tax policy, it was two decades before the Institute adopted a formal advocacy, and perhaps surprisingly, the impetus was not developments in the United States. Rather, it was the creation in Canada of the Royal Commission on Taxation, whose mandate was to recommend comprehensive improvements to the federal taxation system.
The so-called Carter commission issued a six-volume report in 1966, and three years later the government issued a White Paper proposing implementation of several far-reaching recommendations. Some of the recommendations were so controversial that TEI’s comments on the proposals were sought and, after appropriate clearances were obtained from the Board of Directors, ultimately provided. In light of the diversity of the Institute’s membership, TEI neither endorsed nor rejected the policy underlying any specific proposals (such as those relating to mineral depletion allowances); the Institute did, however, offer comments on the unnecessary complexity, administrative difficulty, and increased recordkeeping that the proposals would spawn. (My 1970-1971 predecessor — Mac McKie, the Institute’s first Canadian president — gave an interview to the Toronto Globe & Mail about TEI’s comments in which he advocated for a “‘pure’ and uncluttered tax system” in which the definition of income would be significantly widened and the
tax rate lowered.)
TEI subsequently undertook to articulate general policy of advocacy and, with relatively tweaks and updates here or there, that same policy (first adopted in 1972) applies today:
TEI will focus primarily on issues of a tax policy or tax administration nature, but may also address other issues of concern to a broad segment of the Institute’s membership. Such latter issues, however, must be non-divisive and essentially non-controversial within TEI’s membership, and generally must not be taxpayer or industry specific. Issues addressed by the Institute must be tax-oriented rather than relating to broad public policy concerns (even if reflected in tax policy changes), though TEI may comment upon the utilization of the tax law to achieve non-revenue goals.
This advocacy policy has served the Institute well for four decades. It allows the organization to respond to government requests for comments and to advocate for changes, while ensuring that we do not favor one group of members against another. A good example of a topic on which TEI has been able to engage productively under the policy is Schedule UTP, which I wrote about in my last column.
Canadian Liaison Meetings
The wisdom of TEI’s advocacy policy — and of the Institute’s ability to comment on a diverse array of topics while “walking the line” between being a professional organization and a narrow “trade” group — was on display the first week of December in Ottawa. On December 7 and 8, I was pleased to participate in the Institute’s annual liaison meetings with the Canadian Department of Finance and Canada Revenue Agency, meetings that predate TEI’s annual sessions with the U.S. Department of Treasury’s Office of Tax Policy (though not our periodic liaison meetings with the IRS Commissioner).
This year’s meetings were organized by Rod Bergen, the Institute’s Vice President for Canadian Affairs, and the chairs of our Canadian Income Tax Committee and Canadian Commodity Tax Committee — respectively, Carmine Arcari of the Toronto Chapter and Kim Berjian of Calgary. (Rod is a member of the Vancouver Chapter, so the Institute’s Canadian leadership is as diverse as our membership.) I should note that Kim was just recently appointed chair, as a change in employment prompted Diana Spagnuolo to resign. I offer the Institute’s appreciation to Diana for her exemplary service to the Institute, and I thank Kim for agreeing to become chair. Her knowledge, insight, and strong commitment to the Institute’s mission have already paid dividends.
The agendas for the Canadian liaison meetings are reprinted in this issue, and like nearly every successful venture, they are the product of teamwork: Members of the two Canadian committees submitted suggested topics, vetted them among themselves, and then — with the able assistance of TEI’s legal staff — crafted our write-ups into a cohesive whole. The groups divvied up responsibility for handling the various issues at the meetings, and none of the approximately 40 members who participated in the four meetings — a cross-section of members from the Calgary, Montreal, Toronto, and Vancouver Chapters — disappointed. They were prepared; they were dispassionate and professional; they were effective.
Perhaps the most gratifying aspect of the liaison meeting was the camaraderie not only among members of TEI’s two committees (and the Institute’s staff) but between TEI’s delegation and the representatives of Finance Canada and CRA. Indeed, my first trip to Ottawa ended with a luncheon for all TEI and government participants where the conversations were cordial, and the commitment to continued cooperation and engagement undeniably sincere. While the thermometer belied it, I left Canada truly warmed by my experience and confident in the strength of the Institute’s relationships with key Canadian tax policymakers and administrators.
What Will 2011 Bring?
TEI’s commitment to effective engagement with government officials will be tested in 2011. For example, we will continue to address ongoing tax administration challenges (such as the implementation of Schedule UTP, FACTA, and business 1099 reporting — all topics on which we engaged on 2010).
We will also be tested by the perennial topic of tax reform. It is too early to judge whether there will be any action on this topic in the new year, but all signs point to a significant amount of “stage setting” in 2011. This year’s election results, the results of the lame-duck session of Congress (most notably, the extension of the
Bush-era tax cuts and what that means for the budget deficit), and the final report of the Bowles-Simpson Deficit Reduction Commission (as well as several “competing” reports) all suggest that the time for “kicking the can down the road” is nearly at an end. As tax professionals, we can hope that is the case.
TEI’s role in the tax reform debate is a work in progress. As was the case in Canada in the 1960s and 1970s — and in the United States in the 1980s — the Institute’s expressly endorsing nor opposing the policy underlying any specific proposals (such as the adoption of a territorial tax system or a value-added tax) remains problematic. That said, I am confident we can productively engage in the debate, offering comments and recommendations that advance sound policy goals. In this regard, I commend the Institute’s 2009 submission to the President’s Task Force on Tax Reform, Guideposts for Tax Reform. (It is reprinted in the November-December 2009 issue of The Tax Executive, and is available on our website.) The document’s straightforward articulation of the principles that should guide Congress (for example, “U.S. business does not operate in a closed system” and “the tax system should generally not pick ‘winners’ and ‘losers’”) will be our lodestar.
Season’s Greetings
On behalf of the Institute’s Board of Directors and its staff, I extend the season’s greetings to all members of the Institute and other readers of The Tax Executive. May 2011 bring you health, happiness, and professional contentment.