Treasury Secretary Steven MnuchinSteven Terner MnuchinOvernight Finance: Outrage builds over Equifax breach | US debt passes trillion | Trump scrambles tax reform politics | Trump may seek more disaster aid Bipartisan bill would force Treasury to put Tubman on bill Judd Gregg: The complex path to tax simplification MORE on Tuesday said that President Trump’s goal of lowering the corporate tax rate to 15 percent may not be achievable.
“I don’t know if we’ll be able to achieve that, given the budget issue,” Mnuchin said at an conference hosted by CNBC. “But we’re going to get this down to a very competitive level, and what the exact number is less important. And what’s more important is making sure we have a competitive system.”
Mnuchin’s comments are similar to remarks that Speaker Paul RyanPaul RyanTrump’s debt deal puts an end to politics as usual in Washington Trump’s deal with Schumer, Pelosi should dismay conservatives GOP group launches new TV ad on tax reform MORE (R-Wis.) made last week. Ryan said that “the numbers are hard” to make a 15-percent rate possible, and that he’s shooting for a rate in the low-to-mid 20s.
Republicans across the board want to lower the corporate rate, which is currently 35 percent, as part of tax reform. But if Republicans want to pass a tax bill through reconciliation to prevent a Democratic filibuster, the legislation can’t add to the deficit outside the budget window.
Mnuchin said on Tuesday that he hopes tax-reform legislation is bipartisan, but that Republicans are prepared to use reconciliation if a bill won’t be able to get 60 votes in the Senate needed to overcome a filibuster.
“This is the most important issue for the American economy,” he said.
Most Senate Democrats have said they won’t support a tax bill that cuts taxes for people in the top 1 percent of income.
Mnuchin said that Republicans plan to eliminate the state and local tax deduction, so there won’t be a tax cut for people in high-tax states such as New York and California. He hopes to lower the top individual tax rate slightly to offset the elimination of the deduction so that residents of high-tax states don’t see a tax increase.
The White House and GOP lawmakers have said they want to lower tax rates for both corporations and “pass-through” businesses whose income is taxed through the individual code.
Mnuchin said that policymakers will set rules to prevent wealthy people from using the lower pass-through rate as a tax loophole. For example, services companies such as accounting firms won’t be able to use the lower rate, he said.
During the presidential campaign, Trump called for ending the “carried interest” tax break that benefits investment-fund managers — a tax break that Democrats would also like to see eliminated.
Mnuchin said that hedge funds won’t be able to use the provision, but said the administration wants to make sure other industries are encouraged to create jobs.
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