Treasury Secretary Mnuchin: We're committed to 'very significant' tax reform by August recess

Treasury's Steve Mnuchin: We are committed to passing 'significant' tax reform
Treasury's Steve Mnuchin: We are committed to passing 'significant' tax reform

Treasury Secretary Steven Mnuchin said Thursday that he wants to see "very significant" tax reform passed before Congress' August recess, in what could prove a tough task as lawmakers work through a complex agenda.

"We want to get this done by the August recess. We've been working closely with the leadership in the House and the Senate and we're looking at a combined plan," he told CNBC in his first television interview since assuming office.

President Donald Trump has repeatedly made pledges for tax reform and regulatory cuts since he took office, creating optimism among business executives and investors.

So far, Trump's plan is unclear. He has promised to detail a tax plan in the coming weeks, without saying much about whether it is a version of his proposal outlined during the campaign or if it will resemble House Republicans' plan. The U.S. Senate has presented no proposal at all.

Congress is expected to introduce legislation next month to at least partially repeal the Affordable Care Act — Obamacare — before it moves on to tax reform. Mnuchin said the White House and both chambers of Congress "are all working together" on the tax plan.

The 'Mnuchin rule'

Mnuchin said the administration is "primarily focused on a middle-income tax cut and a simplification for business." Most independent analyses have estimated that Trump's tax plan will benefit wealthy people much more than the middle class, and in November Mnuchin told CNBC that he wanted "no absolute tax cut for the upper class," something Sen. Ron Wyden, D-Ore., dubbed the "Mnuchin rule."

The new Treasury secretary indicated that should the wealthy get a tax cut, such a break would go hand in hand with the closing of loopholes that currently benefit the rich. However, he did not state as firmly as he did before that the wealthy will not get an "absolute" tax cut.

"Look, as I've said before, we're primarily focused on a middle-income tax cut and simplification for business. And what we are focused is that on the high end, if there are tax cuts, that they are offset with reduction of deductions and other things," Mnuchin said. "So it's something we're going to carefully look at."

Steven Mnuchin
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He also addressed so-called border adjustment, a key provision of the House Republican tax plan. It taxes imports, bringing in new revenue, but raising costs for companies that use components from abroad or retailers that sell products to Americans that are made in Asia and elsewhere. Border adjustment plans do not tax exports, and many U.S. manufacturers strongly back the plan for that reason.

Many retailers have slammed the potential provision, and several key senators have expressed their own doubts, putting border adjustment in doubt. Mnuchin said that "we're looking at" border adjustment, noting that the plan has "interesting aspects" but also said "there are some concerns."

Mnuchin echoed other Trump administration officials by saying the tax plan should not be judged by how much it cuts U.S. tax revenue without taking into account economic growth. Critics on both sides of the aisle have raised concerns that the plan would not be "revenue neutral," meaning they think it would increase America's budget deficits.

White House may use its own numbers

He said the Trump administration may judge the tax by its own dynamic scoring, which takes into account economic growth, rather than Congressional Budget Office estimates.

"Well, I think one of the issues when you talk about revenue neutral, there's going to be the scoring the Joint Committee uses, and then there's going to be our own internal views at Treasury and the administration. And my guess is that our growth assumptions will be higher than what they use to score the plan. So, again, these are the types of things we're looking at," Mnuchin said.

The Treasury secretary also said the administration still aims for "sustainable growth of 3 percent or more." He said he expects to hit that mark more toward the end of next year.