Steven Mnuchin stood by President Trump’s declaration that the Republican plans now working their way through the House and Senate will deliver the biggest U.S. tax cuts ever. But the math says otherwise.
The Treasury secretary agreed with Trump’s comments that the plans deliver the “largest tax cuts in the history of this country,” citing proposals to slash the corporate tax rate.
“There’s lots of different ways of looking at it. This will be the largest change since President Reagan,” Mnuchin said Sunday on CNN’s State of the Union.
Studies released over the past few days by Congress’s Joint Committee on Taxation suggest that the tax cuts under consideration by the House and Senate would be far shallower than those enacted in 1981 under then-President Ronald Reagan -- at least in relation to U.S. gross domestic product.
Those studies show that the cuts proposed in the House bill and the Senate plan would amount to no more than $190.1 billion in 2018 -- or almost 1% of annual GDP.
A study released in October by the nonpartisan Committee for a Responsible Federal Budget used Treasury Department data to calculate that Reagan’s 1981 cuts represented about 2.9% of GDP at the time.
There’s worse news for Trump and Mnuchin: the CFRB’s analysis also found that tax cuts enacted in 2010 as part of the Tax Relief and Job Creation Act amounted to 1.3% of GDP.
And cuts enacted in 2012 as the American Taxpayer Relief Act amounted to 1.8% of GDP.
Both came during the administration of former President Obama, as part of efforts to jump-start the economy after the 2007-08 global financial crisis and the worst U.S. recession since the 1930s, which ended in 2009.
Trump has repeatedly called the proposed tax cuts that Congress is considering the largest ever.
Mnuchin was challenged on Sunday by CNN correspondent Jake Tapper, who said that by various measures, including when adjusted for inflation, the measures would fall well short of that mark.
Considering the planned cut in the corporate tax rate to 20% from 35%, “if that’s not the biggest tax cut to make our businesses competitive, what is?” Mnuchin said. “The pass-through rate is going to be the lowest rate since the 1990s.”
“It is the biggest tax cut in history on mostly every single part of the plan,” Mnuchin said.
Republicans in Congress are rushing to meet a tight, self-imposed deadline to approve tax legislation by year’s end. House leaders plan a floor vote on their bill this week, while Senate leaders say they want to act on theirs before Nov. 23.
The two plans differ -- including on when the corporate tax rate cut would go into effect.
The House would make that cut in 2018, while the Senate plan would delay it for a year.
Contrasts also include provisions for pass-throughs and overseas tax structures.
Also, the House bill would repeal the estate tax after 2024, while the Senate plan would merely limit the number of multimillion-dollar estates it would affect.
Mnuchin has so far called the differences “small,” saying that the administration can help Congress iron those out after the House vote. The bill will be on Trump’s desk in December, ready to sign, he said.