Vanguard’s role in Washington

Vanguard’s Government Relations Office has been influential on a number of issues, including capital gains and retirement savings taxes. Vanguard strives to educate policymakers to better serve investors. 

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Talli Sperry: And the question is from Joan Chapin, who’s asking, “How long has Vanguard been in Washington, and could you describe an issue that Vanguard has worked on and was successful in?”

Jerry, can you get practical about how we’re influencing?

Jerry Golden: Absolutely! For the first question, it’s an interesting answer. Vanguard has had some level of representation, directly or indirectly, for a long time. And because we have the ability, of course, wherever different subject matter experts or leaders from Vanguard are, to come into Washington as needed, that role has always been something we valued, and it’s always been something we’ve emphasized.

Actually having bricks and mortar, a small office in Washington to make sure we’re here and represented at all times on behalf of investors, that’s been more within the past dozen years or so. But I don’t think that’s the beginning of our engagement with Washington on behalf of investors. I think that started 42–43 plus years ago, in effect.

Talli Sperry: Well, thanks for showing us the bricks and mortar.

Jerry Golden: That’s right. Can you remind me of the second part? I apologize.

Talli Sperry: Sure. No, that’s fine. Sorry I interrupted you there.

The second question is, “Could you talk about a practical issue that we have been successful in?”

Jerry Golden: Sure. I mean, a lot of what I think Vanguard’s voice has helped manage to achieve is oftentimes, and this runs the political spectrum, from a member of Congress or a policymaker in an administration that is far to the left politically, more progressive, or to the right politically, more conservative. Oftentimes, the challenge isn’t that the policymaker you’re dealing with has bad intentions—they often have wonderful intentions. But the challenge is that there are gaps in their perspective in terms of what the consequences might be for moving in one direction or the next.

Our biggest successes have been times where different policy issues that looked like they were going to prevail managed to not prevail. A bad decision was avoided, or a harm was avoided.

Within the tax reform debate, to keep it kind of more recent, in 2017, there were a number of different provisions being contemplated as a way to offset the goal that Republican members of Congress had identified in lowering overall rates to pay for those needs, that would have been, we worried, harmful to the needs of investors.

Issue by issue, whether it was the potential for undoing the ability for so-called first in, first out capital gains treatment, or whether it was undoing current options for how retirement savings can be taxed, whether they be on a traditional basis, or mandated solely on a Roth basis, or any number of items related to the tax treatment of municipal bonds, for example. I think Vanguard tried to be an educator, tried to engage, and tried to make sure that our role was pragmatic in those discussions.

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