Mnuchin Promises Individual, Corporate Cuts With Tax Overhaul

Ed. Note: This article first appeared in Bloomberg

U.S. Treasury Secretary Steven Mnuchin said the White House is committed to a tax overhaul that includes corporate and individual tax cuts, while acknowledging it may be a challenge to get it completed by August.

“We’re going to do tax reform as absolute -- we are reforming both personal and the corporate side,” Mnuchin said Friday during an event in Washington organized by media company Axios. “We aren’t cutting this up.”

Mnuchin’s comments come as President Donald Trump and House Republicans struggle to agree over provisions in a bill to repeal and replace Obamacare that was scheduled for a Friday vote -- with the outcome uncertain.

Some Republican lawmakers have warned that if the health bill fails, their goals of tax cuts could be imperiled.

In February, Trump had promised a “phenomenal” tax plan within two or three weeks.

White House Budget Director Mick Mulvaney on Friday said the White House will be taking the lead on pushing the tax overhaul -- and that the president is working on that plan now.

“When you see tax reform the first time, it will be the president’s plan and we’ll drive the debate on that,” Mulvaney said during an interview on ABC’s “Good Morning America.”

‘Simpler’ Task

After difficult negotiations on the health bill, Mnuchin said he thought the tax overhaul might go more smoothly.

“Health care and tax reform are two different issues,” he said. “Health care is complicated, tax reform is a lot simpler in some ways.”

Mnuchin has previously said tax legislation would be completed by Congress’s August recess.

On Friday, he said he is still optimistic about the August target, but signaled a tax overhaul by the fall may be more likely. House Speaker Paul Ryan has said the GOP is committed to an August deadline.

Mnuchin expressed concerned about a controversial provision that’s a centerpiece of Ryan’s tax plan -- border adjustments, which would tax U.S. companies’ imports while exempting their exports.

The issue -- which opponents say would increase consumer prices -- has divided Trump’s White House advisers, and the president hasn’t yet announced a position on it.

Supporters say higher prices on imported goods would be offset over time by a strengthening dollar.

“One of our concerns about it is that if the currency moves, then the Wal-Mart shopper shouldn’t be impacted. But if the currency moves that has an impact for our exporters,” Mnuchin said.

“It’s a very complicated issue worth looking at carefully.”

Corporate Rate

The House GOP plan calls for reducing the corporate tax rate to 20 percent from 35 percent. Trump campaigned on a tax plan to reduce the rate to 15 percent.

On Friday, Mnuchin said it was premature to speculate on what the exact corporate rate would be in Trump’s tax proposal.

On the individual side, Mnuchin reiterated that Trump’s primary focus is a tax cut for middle-income Americans.

The House health bill, which Trump endorsed, contains individual tax cuts of its own -- but they’re focused on high earners.

The bill would eliminate a 3.8 percent net investment income tax that was imposed by the 2010 ACA, along with a 0.9 percent Medicare tax.

Those levies apply only to single people with incomes above $200,000 and married couples earning more than $250,000.

Posted by: The Trust Advisor


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