LDN - Business

Can't guarantee tax cut for entire middle class: Mnuchin

[October 02, 2017] By Lucia Mutikani

WASHINGTON (Reuters) - U.S. Treasury Secretary Steven Mnuchin on Sunday said one of the top goals of the Trump administration's tax plan is to help the middle class, but he could not guarantee that every middle-class family would receive a tax cut.

"It is our objective that the entire middle class will get a tax cut," Mnuchin said on ABC's "This Week" program. "You cannot make guarantees because every single person's taxes are different, people take advantage of different things."

President Donald Trump last week outlined his plan, which includes reducing the corporate income tax rate to 20 percent, establishing a new 25 percent tax rate for pass-through businesses and lowering the top income tax rate for individuals to 35 percent.

A report on Friday from the non-profit Washington-based Tax Policy Center found that taxpayers in the top 1 percent income bracket - above $730,000 - would receive about 50 percent of the total benefit from the overhaul, with their after-tax income forecast to increase an average of 8.5 percent.

The group said about 12 percent of taxpayers would face an average tax increase of roughly $1,800. This includes more than a third of taxpayers making between about $150,000 and $300,000, as most itemized deductions, including for state and local taxes, would be repealed.

Mnuchin and other Trump administration officials defended the plan, saying it is not aimed at helping the rich, while acknowledging the details were in flux.

"The objective of the president is that rich people don't get tax cuts," Mnuchin said. "As we go through this process, we will explain to the American public how this works."

Mnuchin was also asked on whether a proposed new rate of 25 percent for so-called pass-through businesses would end up being exploited by wealthy people looking to lower their tax bills.

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Treasury Secretary Steven Mnuchin walks through the lobby of Trump Tower in New York City, U.S., August 15, 2017. REUTERS/Brendan McDermid

About 95 percent of American businesses are pass-throughs such as sole proprietorships, partnerships and S-corporations, according to the Brookings Institution, a Washington think tank. The name comes from the profits and losses of such businesses that pass through directly to their owners, unlike public corporations.

Mnuchin said the administration would seek to put "guard rails" around rules for pass-throughs to avoid people using them as a loophole.

White House Budget Director Mick Mulvaney told CNN's "State of the Union" program: "This really is about the middle class and the corporate tax rate, for the president."

Gary Cohn, Trump's top economic adviser, said no one knows how the plan would affect Americans because it has not been finalized.

"When people come out with these definitive statements of what the tax plan is going to do, or what the tax plan is not going to do, I find it hard to believe, because we don't even know what the tax plan is going to look like in its entirety," Cohn said on Fox News’ "Sunday Morning Futures" program.

Mnuchin said the administration hoped to have the tax overhaul legislation passed in December.

(Reporting by Lucia Mutikani and Julia Harte; Editing by Caren Bohan and Lisa Von Ahn)

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