Opening Statement of Michael F. Mundaca
Nominee for Assistant Secretary of the Treasury for Tax Policy
U. S. Senate Committee on Finance
As Prepared for Delivery

Thank you, Chairman Baucus, Senator Grassley, and members of the Senate Finance Committee, for the opportunity to appear before you today.  I am honored to have been nominated by President Obama to serve as Treasury Assistant Secretary for Tax Policy, and I am grateful to Secretary Geithner for recommending me to the President.  And I want to thank you and your staffs for meeting with me over the last weeks to discuss tax policy issues and my qualifications for the position to which I have been nominated.

I know the time is brief.  If you permit me, Mr. Chairman, I would like to introduce the members of my family who are here today and who have supported me through the years.  My wife, Gina, who has been with me since our time together at university, and my daughter, Ana, who is a fourth-grader at the Oyster-Adams Bilingual Public School, here in Washington, D.C.  My son, Alexander, who is 4 years old and also a student at Oyster, could not be with us here today.  All three have been a steadfast source of support and I thank them for their consent to my continuing public service.  If approved by this Committee and confirmed by the Senate, I will need their further support and guidance.

If confirmed, I would be honored to begin my third phase of federal public service.  I first worked at the Treasury Department from 1997-2002, starting as an Attorney-Advisor in the Office of the International Tax Counsel in Tax Policy and leaving after over 5 years' service as Deputy International Tax Counsel, returning to the private sector, as a partner at the accounting firm, Ernst & Young.  I was honored to be asked to the return to the Treasury Department in 2007, as Deputy Assistant Secretary for International Tax Affairs, and have served at the Treasury Department since that time.

My commitment to public service was instilled in me by my parents.  My father, Fred Mundaca, was born in Chile and came to this country as a teenager with his parents.  He met my mother, Irene, in Staten Island, NY, where his family settled and where my mother lived.  When I was born, my parents and my sister, Marie and I, lived in the West Brighton housing projects on Staten Island.  My father went to Staten Island Community College during the day and worked at night for the U.S. Postal Service.  After getting his degree, he was hired by IBM, where he worked for the next 25 years, until retiring.  Through saving and borrowing, my mother and father raised enough money to move us out of the projects and into the house my parents still live in to this day.  They also helped put my sister and me through college and graduate school, with the additional help of student loans and scholarships.  My parents' experience taught me to work hard, play by the rules, and help others whenever you can. 

I hope that my children can learn those lessons from me. 

And I also hope that my children will have all the opportunities that I have had.  I do not need to tell this Committee that both the United States and the world economy have faced unprecedented turmoil.  However, I am convinced that we can meet the serious challenges we continue to face with the right mix of economic and tax policies that address near-term conditions in a manner that promotes long-term growth.

Tax policy will play an important role as we move ahead.  We need a tax system that is simple, fair, and promotes growth, while providing necessary revenue.  Our current system falls short.

If confirmed, I look forward to working with this Committee and Congress to address the necessary changes to our tax system. 

In addition to changing our current system, however, we must also work together to improve compliance with our current rules.  Non-compliance undermines confidence in the fairness of our tax system and fosters further non-compliance.  It also results in a de facto tax increase on compliant taxpayers, who must pay more because others fail to pay what they owe.

It is incumbent upon the Treasury Department to issue guidance necessary to provide taxpayers the information they need to meet their obligations.  Taxpayer service is also an important element.

But we must do more.  The Obama Administration has also already proposed and already taken a number of additional significant steps to increase compliance.

We are currently moving to implement the recent important changes that Congress passed to increase reporting with respect to credit card and securities transactions.

In addition, the Administration's Budget includes a number of proposals to increase both domestic and cross-border compliance.  We welcome the recent introduction by the Chairman and others of a significant offshore evasion bill that incorporates the approach of the Administration's proposals, and appreciate the leadership this Committee as a whole has shown on the important issue of improving compliance.  If confirmed, I look forward to working with this Committee and Congress to enact those proposals.

Treasury has also sought to improve compliance by increasing our access to the information held by our trading partners which is necessary to enforce our laws.  We have recently entered into a number of important agreements to exchange tax information, including agreements with Switzerland, Luxembourg, Monaco, and Gibraltar.

In addition, through greater cooperation within the G-20 and the OECD, we have been able to increase the number of countries that have committed to full tax information exchange and to establish a process to assess implementation of those commitments.

In closing I would like to thank the lawyers, economists, accountants and other professional within the Office of Tax Policy.  I have never worked with such a talented group of individuals, and it has been an honor to head the office during this challenging period. 

I am humbled and honored to have the possibility of serving the nation in this new capacity during these extraordinary times.  If you and your colleagues in the Senate give me the opportunity to serve as Assistant Secretary for Tax Policy, I pledge to you diligent and dedicated service, and I promise to apply myself fully to the best of my ability to justify your trust and confidence.

Again, thank you for allowing me to appear before you today.  I would be pleased to answer any questions.

###

Treasury Awards $5 Billion to Encourage Private
Sector Investments in Local Communities

New Markets Tax Credit Program Includes $1.5 Billion
Awarded Under the Recovery Act

CHICAGO-- As part of the Obama Administration's efforts to revive local economies, Treasury Secretary Tim Geithner today visited a job training center in Chicago benefiting from private sector investments made through the New Markets Tax Credit (NMTC) program. As part of his visit, Geithner announced $5 billion in NMTC awards, including $1.5 billion made possible through the American Recovery and Reinvestment Act (Recovery Act), for more than 90 organizations in communities around the country.

"We must rebuild our economy on a firmer foundation, one that equips our workers with the skills and education they need to compete," said Secretary Geithner.  "We must make sure that the advantages of this new, stronger economy are broadly shared. Too often, communities are left behind by economic growth.  The Recovery Act and the New Markets Tax Credit program help break this vicious cycle to ensure the benefits of growth reaches all corners of the country."

In May 2009, Secretary Geithner announced an initial $1.5 billion for NMTC awards under the Recovery Act, making today's announcement the second round of Recovery Act funding for the program.  The NMTC program, established by Congress in December 2000, permits individual and corporate taxpayers to receive a credit against federal income taxes for making equity investments in investment vehicles known as Community Development Entities (CDEs). The investor receives a credit totaling 39 percent of the cost of the investment. CDEs must apply to the Treasury's Community Development Financial Institutions (CDFI) Fund, which administers the NMTC program, to compete for this allocation authority.  The organizations receiving awards have identified principal service areas that will cover nearly every state in the country, as well the District of Columbia and Puerto Rico and plan to invest in renewable energy projects, charter schools, health care facilities, manufacturing companies, and retail centers.

Secretary Geithner's announcement was made today at the Greater West Town Community Development Project (GWTP) which provides job training and placement services to local residents, and educational and career development services targeted to former Chicago public high school drop-outs.  Through financing provided by the Chicago Development Fund, a New Markets Tax Credit award recipient in Chicago, the GWTP will convert a vacant industrial building into a new job training and education facility. The GWTP projects the development will create 30 construction jobs and 35 permanent jobs for employees. Secretary Geithner was joined at the site by Donna J. Gambrell, Director of Treasury's CDFI Fund; Mayor Richard Daley; Congressman Danny Davis (IL-7); and Bill Leavy, Director of the GWTP.

Said Gambrell: "The New Markets Tax Credit Program is promoting private-sector investment in our nation's communities and is helping to stimulate economic growth, create jobs and bringing new opportunities to Americans most in need.  This innovative federal program is helping to finance numerous businesses and real estate projects across the country--projects that may not have been financed if not for New Markets Tax Credits."

Said Leavy: "The major reason we are able to build this new job training facility is because we received a New Markets Tax Credit award.  This innovative federal program is supporting the expansion of employment and educational opportunities so desperately needed in communities like ours."

To date, over $14 billion of private-sector capital has been invested through the NMTC Program into urban and rural communities throughout the country. Data reported through 2008 shows that $12.7 billion dollars of NMTC capital has been invested into approximately 2,000 businesses and real estate developments. A complete list of the organizations selected and additional information on the NMTC Program can be found on the CDFI Fund's web site at: www.cdfifund.gov.

###

Administration Calls on Congress to Approve Key Housing Measures

Statement from Treasury Secretary Geithner on
House and Senate Introduction of
Foreign Account Tax Compliance Act of 2009

WASHINGTON – The U.S. Department of the Treasury today released the following statement from Secretary Tim Geithner on the introduction of the Foreign Account Tax Compliance Act of 2009:

"The legislation introduced today by Chairman Rangel and Chairman Baucus follows through on the Administration's commitment to combating offshore tax evasion and ensuring a level playing field.  For too long, individuals have taken advantage of the system by hiding money in accounts overseas, while millions of families and small businesses here at home pay the price.  This legislation will reduce the amount of taxes lost through the illegal use of hidden accounts and is the next step in making sure that everyone pays their fair share. 

"This legislation fits well into the Administration's dual-track strategy of improving our domestic tax laws while increasing global cooperation on tax information exchange to help narrow the tax gap and create the fairer tax system we need.  We have had great success recently in working with countries around the world to increase tax information exchange as part of the global effort to end offshore tax evasion.

"In addition to the leadership of Chairman Rangel and Chairman Baucus, I want to acknowledge the work of Senators Kerry and Levin and Representatives Neal and Doggett in support of a strong international tax enforcement agenda."

###

October 23, 2009
TG-331

Treasury Surpasses $3 Billion in Recovery Act Funds for States to Provide Affordable Housing

California to Receive $284 Million in Payments in Lieu of Tax Credits;
To Date, 45 State Housing Agencies Receive Funds

WASHINGTON – As part of the Obama Administration's efforts to strengthen communities and ease pressures on the housing market, the U.S. Department of the Treasury today announced $284 million in American Recovery and Reinvestment Act (Recovery Act) funding to spur the development of affordable housing in California. To date, 45 state housing authorities have been awarded a total of $3.1 billion in payments in lieu of tax credits for affordable housing projects.

"This innovative Recovery Act program allows the federal government to partner with states to support local developers and helps ensure that housing developers can access the financing necessary to build affordable housing," said Treasury Deputy Secretary Neal Wolin. "We have worked quickly to make available more than $3 billion to state housing agencies, and we expect to see continued efforts at the state level, so that these funds can be delivered to the communities that need it most."

In May 2009, the Treasury Department launched an innovative program to provide payments in lieu of tax credits to state housing agencies to jump start the development or renovation of qualified affordable housing for families across the country.  Upon receiving notice of these allocations, state housing agencies manage a competitive process to disburse funds to qualified developers. This is an ongoing program open to additional state applications through 2010.

The following is a complete list of funds awarded to states under the program to date. For more information on the award to California, please contact Alice Scott, Public Affairs Director of the California Tax Credit Allocation Committee, ascott@treasurer.ca.gov, (916) 651-9411.

REPORTS

• Designated State Housing Credit Agency