October 03, 2023

Warren, Whitehouse, Van Hollen, Sanders Urge Treasury to Use Rulemaking Authority to Close Loopholes, Make Tax System Fairer

Treasury Has Authority to Increase Tax Fairness While Republicans Obstruct Important Tax Reforms

Text of Letter (PDF)

Washington, D.C.  – U.S. Senators Elizabeth Warren (D-Mass.) and Sheldon Whitehouse (D-R.I.), both members of the Senate Finance Committee, and Senators Chris Van Hollen (D-Md.) and Bernie Sanders (I-Vt.) sent a letter to Treasury Secretary Janet Yellen and Internal Revenue Service (IRS) Commissioner Daniel Werfel, urging them to proactively use the Treasury Department’s rulemaking authority to close tax loopholes that create inconsistency and unfairness in the tax system and threaten the government’s ability to raise important revenue.

“We commend the Treasury Department for taking action to implement President Biden’s legislative achievements – including the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA) – which lower costs and invest in America while making our tax code fairer. However, to build on these successes and continue to strengthen tax fairness, the Treasury Department should also use the full extent of its existing rulemaking authority and address inequities in implementation of other parts of the tax code,” wrote the senators.

In the letter, the senators note that the Biden administration has taken important actions to increase tax fairness and fight decades of corporate lobbying for tax cuts and loopholes through the Inflation Reduction Act – implementing a minimum federal income tax rate of 15 percent for all corporations that report at least $1 billion in profits, establishing a tax on corporate stock buybacks, and providing significant funding for the IRS to go after wealthy and corporate tax cheats. 

The senators also commended President Biden’s current proposals  to make the wealthy and large corporations pay their fair share, including reversing the Trump administration's 2017 tax cuts, closing tax loopholes used by billionaires, and his leadership in establishing a 15 percent global minimum tax.

“These are important steps to ensure our tax code works for everyone, not just those at the top. But while Congressional Republicans continue to obstruct these important tax reforms and instead clamor for even more tax giveaways for the wealthy, the administration should focus on additional tools at its disposal to strengthen tax fairness. Administrative action is critical for implementation of new tax laws, but it should also be used to improve the implementation of previously-passed legislation and eliminate loopholes,” continued the senators. 

The senators suggested actions Treasury can take to improve tax fairness using existing statutory authority: 

  • Regulations and other guidance to address abuses for ultra-wealthy families and dynastic wealth, including to police valuation games, perpetual dynasty trusts, and transfers of foreign assets
  • Regulations and other guidance to ensure that large multinationals pay their fair share on the subsidiaries’ passive earnings
  • Regulations and other guidance to ensure that fund managers and other business owners pay their fair share of payroll taxes

The senators concluded by noting that Treasury advancing tax fairness through its existing statutory rulemaking authority would build on the Biden administration’s strong history of using its executive authority to advance policies helping working families and increasing economic fairness, including providing relief to student borrowers, strengthening worker protections, banning junk fees, and lowering prescription drug costs. The senators are asking Treasury to provide their staff a briefing on its authority to act to make the tax system fairer and its rulemaking agenda for doing so by November 2, 2023.  

Senator Warren has led the fight to close tax loopholes for the wealthy and giant corporations to ensure a more fair tax system: 

  • In August 2023, Senators Warren (D-Mass.), Bob Casey (D-Pa.), Richard Blumenthal (D-Conn.), and Sanders sent a letter to Treasury and IRS, urging them to quickly propose and implement strong rules that close loopholes exploited by crypto tax evaders.
  • In April 2023, Senator Warren sent a letter to Commissioner Werfel and Secretary Yellen, urging them to follow through on the commitments of the Biden administration by examining and taking concrete steps to address racial inequities in tax benefits and enforcement.
  • In March 2023, Senators Warren, Van Hollen, Sanders, and Whitehouse sent a letter to Treasury Secretary Janet Yellen, urging her to use the full extent of the Treasury Department’s regulatory authority to crack down on the ultra-wealthy’s use of trusts to dodge paying their fair share in taxes.