Mnuchin hopes scrapping state deductions won't make some taxpayers owe more

Key Points
  • Treasury Secretary Steven Mnuchin says he hopes reducing federal tax rates will cancel out the loss of state and local tax deductions.
  • The Trump administration's tax plan calls for scrapping those deductions, which benefit taxpayers in high-tax blue states the most.
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Treasury Secretary Steve Mnuchin: We are super-focused on tax reform

Treasury Secretary Steven Mnuchin said Tuesday he hopes reductions in federal tax rates can cancel out the loss of state deductions under the Trump administration tax plan.

"I'm hopeful that they'll get a slight decrease in federal government [taxes] which will offset what they will lose on the state deductions," Mnuchin said of taxpayers who benefit from state deductions.

At the Delivering Alpha conference presented by CNBC and Institutional Investor, Mnuchin reiterated that the White House wants to scrap state and local tax deductions. Eliminating those provisions, in general, would affect high-tax blue states like New York and California.

"I'm hopeful in these states that taxes don't go up," Mnuchin said. "So we'll have a slight rate decrease on the high end to offset the deductions. And I'm hopeful we can size that so that it doesn't hurt New York and California."

Republicans aim to overhaul the American tax code but have faced various hurdles in their goal of passing a tax reform bill this year. Congress and the White House have not yet released a tax overhaul plan but are working this month to prepare legislation.

On Tuesday, Mnuchin insisted that a tax overhaul would happen this year.

"We're going to get this done by the end of the year," Mnuchin said, adding that the administration is "super focused" on the goal following the three-month debt limit and government funding extension passed last week.