By: Ryan Ellis
During the first half of the first year of the Trump Administration, the signature achievement of the new government was clearly the unprecedented use of the Congressional Review Act (CRA). Only ever successfully used once before, the CRA repealed over a dozen late-filed regulations from the Obama era. Deregulation is not the sexiest aspect of pro-growth policy, but it is an essential one.
As successful as the CRA is, there are some leftover pieces of regulatory activity that didn’t make the cut. One big one directly affects the death tax, but that’s not the only one.
On August 4, 2016 the Treasury Department announced an intention to issue regulations affecting the way in which estates are valued. To oversimplify a very complex topic, there is often a dollar figure at which an estate can be valued in theory, and a lower dollar value at which an estate can be valued on the street or in a fair market. Prior guidance allowed an estate to peg its worth to the lower “street value,” not the higher theoretical value. The regulation would seek to reverse that, throwing many more estates into the taxable death tax range.
Over the next few months of the waning Obama Administration, the “Section 2704” regulations, as this was known, took a lot of heat from Congressman Warren Davidson (R-Ohio), Senator Marco Rubio (R-Fl.), and a grassroots small employer army organized by the Family Business Coalition (who got 10,000 comments on the record and did a joint letter of opposition from 119 activist and business groups).
That hard work paid off when new Trump Treasury Secretary Steve Mnuchin promised in a Senate hearing to explore retracting the notice to issue the regulation. However, taxpayers are still waiting for a formal retraction to happen. In theory, the regulation is a clear and present threat.
How many other zombie regulations are out there, just waiting for an overzealous bureaucrat to activate? At the risk of mixing a metaphor, how many landmines did the Obama Administration leave in the regulatory battlefield?
Another one is making some news in a totally different policy area. The Occupational Safety and Health Administration (OSHA) did a similar intent to regulate notice in November 2015, in their case on the issue of Beryllium pollutants in workplaces. OHSA’s preliminary notice didn’t go nearly as far as the final regulation they issued in January 2017, which also included those exposed to trace amounts of the element in the abrasive blasting sector. So not only did OSHA issue a midnight regulation, they did so in a way that bait and switched those being regulated.
OSHA claims their rule will prevent 96 deaths each year and average $576 million in annual savings each year for the next six decades. They provide precisely zero evidence for either claim.
Congressman Bradley Byrne (R-Ala.) has taken the reigns on this regulation much like his colleagues did on the death tax rule. It’s vital that active legislators like Mr. Byrne are out there policing what has become an unwieldy and self-perpetuating regulatory state.
For their part, the Trump Labor Department has signaled that they will roll back the “gotcha” element of the rule, the part that surprised everyone when it was issued. Instead, the rule will only apply as far as it was advertised to back in November 2015. Predictably, AFL-CIO president Richard Trumka has declared that “workers will die” as a result of this modest and responsible regulatory change.
What unites the Treasury and Labor Departments here is both the desire to do the right thing on these regulatory time bombs and a lack of political appointees to execute those good intentions. The Trump Administration has been slow to make appointments to these agencies, and they are understaffed as a result. We need to make sure that “personnel is policy” works in our favor before the regulatory state undoes the will of the electorate.