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'Cheating on the numbers' is the only way to cut corporate tax rate to 15%, says Jack Lew

  • Former Treasury Secretary Jack Lew says that congressional leaders and President Trump should create a tax reform plan under a central idea: "Start by doing no harm."
  • "It would be good if we could do revenue-neutral tax reform that lowers the rates by cutting loopholes — and paying for it. How you do it really matters," Lew tells CNBC.
  • "I'm a big believer we should get rid of the junk in the tax code, lower the statutory rates, have a system that's more competitive," he adds.

Former Treasury Secretary Jack Lew told CNBC on Thursday that congressional leaders and President Donald Trump should create a tax reform plan under a central idea: "Start by doing no harm."

In an appearance on "Squawk Box," Lew said any plan Congress comes up with must not make the current system worse by creating more inequities. He added that tax cuts, not tax reform, would add to the national deficit and harm the economy. He also urged Congress to avoid cuts to programs for the most vulnerable.

"It would be good if we could do revenue-neutral tax reform that lowers the rates by cutting loopholes — and paying for it. How you do it really matters," said Lew, who served under former President Barack Obama.

"I'm a big believer we should get rid of the junk in the tax code, lower the statutory rates, have a system that's more competitive," he said. "I worry about that the choice right now, because it's so hard, it's technically harder and even politically harder."

Trump made another plea for tax reform Wednesday at a rally in North Dakota. He is pressing for a simpler tax code, a lower corporate tax rate and the closing of loopholes for special interests.

Lew said Trump's plan to lower the corporate tax rate by 15 percent is only possible by "cheating on the numbers and adding to the deficit."

On Friday, White House top economic advisor Gary Cohn told CNBC that simplifying the tax code could mean higher earners would pay more, rejecting arguments that the administration's tax plan would benefit the most wealthy.

Regarding Cohn, Lew also spoke on a Wall Street Journal report that Trump is unlikely to pick his top economic advisor to lead the Federal Reserve. Trump was reportedly upset with Cohn's criticisms of the president after a white supremacist rally in Virginia last month.

Lew said he wasn't sure his instincts would mirror the current administration but said he respected the comments Cohn made after Charlottesville.

"I personally would find that a very, very difficult thing to go back to," he said.

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