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Newly designated for Treasury secretary, Steve Mnuchin told CNBC on Wednesday that Donald Trump's tax plan would contain "no reduction" in taxes for the rich. Yet an independent analysis of the president-elect's plan suggests that most of the benefits would, in fact, go to the top earners.
Shortly after confirming that he had been chosen for the role of Treasury secretary, Mnuchin told CNBC that the president-elect's cap on itemized deductions would offset all the other cuts high earners would receive.
"There will be no absolute tax cut for the upper class," Mnuchin said. "Any tax cuts we have for the upper class will be offset by less deductions that pay for it. "
But the nonpartisan Tax Policy Center said Mnuchin's comments don't square with Trump's plan. In an analysis that included the deduction caps, which include benefits from charitable giving and mortgages, the center found that those changes aren't large enough to offset lower income tax and capital gains rates for the top earners.
Specifically, Trump's plan calls for capping deductions for single filers at $100,000, and at $200,000 for joint filers. It would also cut the top tax rate from 39.6 percent to 33 percent; trim the capital gains tax to 20 percent from 23.8 percent; lower the corporate tax and rate for pass-through incomes (partnerships and LLCs used by the weathy); and eliminate the estate tax.
"The limitation on tax preferences available to the rich are not significant enough to offset tax cuts elsewhere in the plan," said Roberton Williams, a fellow at the center. "The cuts on the other side are so large you've got to come up with something really big to offset them. And deductions aren't even close."
According to the center's analysis, middle-class and lower earners would get a tax cut of less than 2 percent. The top 1 percent of earners would get a cut of 14 percent. And the top 0.1 percent would receive a break of more than 14 percent — totaling more than $1 million a year per filer.
The Tax Foundation also found that the Trump plan gives the largest cuts to those at the top — including the cap on deductions. "Even with the cap on deductions, you still end up with a net tax cut for those at the top, and they are the ones benefiting the most from the plan," said the foundation's Kyle Pomerleau.
That's not to say that Trump's plan won't stimulate the economy or investment. And there is no doubt that Trump's plan lowers taxes for almost every type of taxpayer in America.
But Mnuchin may have overstepped the law of numbers when he said the wealthy will get no tax break.