Apri 15, 2008
The tax man
Death and taxes. Today, millions of Americans will wonder, only half-jokingly, which is worse.
Don’t count Robert Carroll among the tax haters. Actually, he’s enamored with the subject. Carroll has dedicated his professional life to analyzing, shaping, and now studying the country’s tax system. He served as the U.S. Treasury Department deputy assistant secretary for tax analysis before arriving at AU in January. As an executive in residence at the School of Public Affairs and vice president for economic policy at the nonprofit Tax Foundation, Carroll now is focused on researching tax policy and teaching it to a new generation of analysts.
“I’d been in the administration for four years and worked on a lot of different issues and was looking for other ways to participate in the policy community and also to get back to some of the more academic-style research,” he says. “The combination of being at AU and the Tax Foundation gives me the great fortune of interacting with students, which has been an enormous amount of fun. AU has this tremendous advantage of being located right in the middle of the nation’s capital. It affords one the ability to participate in the policy community.”
Carroll first got involved in government as a teenager, when he interned for a councilman near his home on Long Island.
“I was always interested in different aspects of public policy,” he says. “I tended to be a little more quantitative. I think where I’ve evolved over time is a nice balance between the public policy and analytical framework.”
Carroll earned his master’s and PhD from Syracuse University, and worked in Albany before coming to Washington. As a member of the Bush administration, he was closely involved with the 2003 Jobs and Growth Act, the centerpiece of which was reducing taxes on corporate dividends and capital gains.
“It was a very exciting time,” he says. “I was focused on analyzing the effects of the tax cuts that had been enacted and advocating that they be made permanent.”
That hasn’t happened yet. Like the Bush tax reform passed in 2001 (which includes abolishing the so-called marriage penalty), the provisions are due to expire in 2010. But Carroll clearly believes the measures make for sound tax policy.
“The Bush tax cuts were designed to do two things,” he says. “Provide stimulus to the economy during a period of economic weakness, and at the same time promote long-term growth. Provisions like the child credit and marriage penalty relief and the 10 percent tax rate that basically provided some assistance to families, addressed some concerns in equity, and those provisions provided stimulus to the economy. The other provisions set the stage for economic growth in the longer term by increasing the after-tax reward for working and by reducing the double tax on corporate profits.”
While at the Treasury Department, Carroll helped put together an analysis of the impact of the cuts on the economy.
“We focused on the longer term,” he says. “In 2006 we released a report that found overall the ’01–’03 tax relief would probably increase the GDP [gross domestic product] in the long run by about seven-tenths of one percentage point.”
Carroll’s stint in government wasn’t entirely consumed by just one issue.
“I had the great fortune of working at the Treasury Department for two secretaries, John Snow and Hank Paulson,” he says. “When John Snow was there we spent an enormous amount of time working on tax reform. When Hank Paulson was there I spent a tremendous amount of time looking at the way in which our business tax system may have fallen behind our major trading partners and viewing business tax reform through the lens of the ability of the United States to continue to create jobs, attract investment, and innovate.
“The world continues to change. We’re in a very dynamic global marketplace, and countries continue to reform their business tax systems. The United States is standing still while other countries in effect look at us in their rear view mirror.”
As Carroll transitions from the public sector into academia, he’s expanding his areas of interest. On Apr. 29 he’s hosting an event on Capitol Hill cosponsored by SPA and the Tax Foundation that will feature panels exploring the presidential candidates’ views on health care reform, climate change, and tax reform. When asked about the Oval Office hopefuls, Carroll offers a wry smile and chooses his words carefully.
“I have to figure out how to say this without showing bias, I’m more nonpartisan than I used to be,” he says. “Most of the candidates have not been particularly forthcoming on specific details. That said, Sen. McCain would tend to rely more on market mechanisms to affect outcomes than Sen. Clinton and Sen. Obama, they tend to see a larger role for government. Interestingly, in the case of energy tax policy, it’s a little less clear whether there are such marked differences between the candidates. Sen. McCain has been supportive of a cap and trade program to address CO2 admissions, and Sen. Obama and Sen. Clinton have endorsed the same proposal.”
Long past midnight tonight, when the final returns are postmarked and taxes are cleansed from the national consciousness, Carroll will continue to delve into a topic most would rather forget.
“You want the individuals to make decisions as much as possible on economic merit absent tax considerations,” he says. “You want a more tax neutral environment. That in a nutshell in my view defines sound tax policy.”
