Revolving Door: Treasury And Accounting Firms

Revolving Door: Treasury And Accounting Firms

By

Leonard Zwelling

https://www.nytimes.om/2021/09/19/business/accounting-firms-tax-loopholes-government.html?searchResultPosition=1

In this front-page article in The New York Times on September 20, Jesse Drucker and Danny Hakim describe what can only be seen as a major conflict of interest pattern between attorneys at major accounting firms and their service in the tax writing section of the Department of the Treasury. This has been going on for years and involves both parties. Lawyers with high rolling clients in the private sector get hired (at dramatically reduced salary) to serve in the government for months to years writing tax laws and corporate regulations that favor those same clients and then leave government to get rehired by their old firms (at much higher salaries) to advise the clients on how to take advantage of the very rules they themselves wrote.

It’s like members of the Food and Drug Administration going to work for big pharma after their government service. Oh, excuse me, that’s common, too.

This also happens up on Capitol Hill. All of the staff with whom I worked in the office of the Committee on Health, Education, Labor and Pensions of the U.S. Senate left shortly after I did and went to work in the lobbying industry or in pharma where their knowledge of process, politics and personalities on the Hill would serve their new employers well.

I have no answer for this for two reasons.

There is not a better source of knowledge about how an industry works than the people serving in it. Of course, the government should seek these people out to serve just as they seek out members of the academic community for their deep knowledge. Who is going to know more about the proper regulation of pharmaceuticals and devices than an academic physician who uses the drugs or devices every day?

Secondly, who better than those people who wrote the laws to help people evade taxes? Of course, the major accounting firms as well as the lobbying firms want those people and will pay handsomely for their skills and insight. It makes sense except for one thing. The American people lose—billions of dollars in potential revenue which gets made up how? New income, sales, gas and property taxes.

There has got to be a line drawn between outright socialism where taxes soar on everyone to free-wheeling capitalism where the rich get all the advantages and economic inequity gets worse every year. It is safe to say that we have not struck that balance, but we could. Simply preclude any lawyer or accountant coming from the private sector into government from rejoining the firm he or she left before their government service. FDA commissioners should not serve on the corporate boards of pharmaceutical companies for five years after their government service and the rules against lobbying your prior congressional office should be toughened and the period of abstinence lengthened.

Before Mr. Biden raises everyone’s taxes (and you know he will) to pay for his $3.5 trillion social welfare program, tighten up these loopholes that the wealthy and their lawyers are crawling through. The article in the Times is scary. The amount of money these people are making for depriving the American people of tax revenue is even scarier.

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