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Currency

'It's very hard not to give tax cuts to the wealthy,' Steven Mnuchin now says

The Trump administration, bent on deregulation from the start, has now completed wholesale repeal of the “Mnuchin Rule.”

It happened in an interview with Treasury Secretary Steven Mnuchin that Politico published Wednesday. Faced with economic analyses showing the White House plan to cut corporate and personal income taxes provides big gains for wealthy Americans, Mnuchin called that result unavoidable.

“The top 20 percent of the people pay 95 percent of the taxes,” the Treasury secretary said. “The top 10 percent of the people pay 81 percent of the taxes.”

“So when you’re cutting taxes across the board, it’s very hard not to give tax cuts to the wealthy with tax cuts to the middle class,” he concluded. “The math, given how much you are collecting, is just hard to do.”

That represents a dramatic reversal from Mnuchin’s initial assertions on the subject. After last November’s election, he appeared on CNBC to pledge that wealthy Americans would receive no tax cut whatsoever.

“Any reductions we have in upper-income taxes will be offset by less deductions so that there will be no absolute tax cut for the upper class,” Mnuchin told CNBC’s “SquawkBox” then.

“When we work with Congress and go through this, it will be very clear: This is a middle-income tax cut.”

After the administration took office in 2017, Mnuchin began softening that pledge, which had come to be known as the “Mnuchin Rule.” When I interviewed him in May at the Peter G. Peterson Foundation’s Fiscal Summit, he described avoiding tax cuts for the rich as a goal, not a commitment.

“The president’s objective is to create a middle-class tax cut,” he told me. “I can’t pledge what the results will be, since the results are going to be a combined effort of the administration and the House and the Senate.

“The president’s priority has been not cutting taxes for the high end,” Mnuchin continued. “His priority is about creating a middle-income tax cut. So we’ll see where it comes out.”

Where it came out, according to analysts at the Tax Policy Center, was a tax plan that in 2027 would give 80 percent of the benefits to the wealthiest 1 percent of Americans. That figure involved some educated guesswork based on details in earlier GOP proposals, since the White House-Congress “Big Six” plan has not yet filled in many details.

President Donald Trump has insisted the plan he wants Congress to pass by year’s end will not benefit rich people like him. “The wealthy are not getting a tax cut under our plan,” National Economic Council Director Gary Cohn told ABC recently.

Under the “Mnuchin Rule,” that was once the Treasury secretary’s promise, too. Yet his new remarks to Politico not only conceded that the rich will get a tax cut, but cast it as mathematically inevitable.

Of course, cutting the payroll taxes that all workers pay to finance Social Security, rather than income taxes, would produce a different mathematical outcome. So would dropping the GOP proposal to eliminate the estate tax — which currently applies only to estates valued at more than $5.5 million for an individual or $11 million for a couple.

But Mnuchin, who like Trump and many top administration officials is very wealthy, cast abolishing estate taxes as a matter of fairness rather than math.

“The estate tax is somewhat of an economic issue, and somewhat of a philosophical issue,” he told Politico’s Ben White. “People pay taxes once. Why should people have to pay taxes again when they die?”

Source: cnbc economy
'It's very hard not to give tax cuts to the wealthy,' Steven Mnuchin now says

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