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WHEN: Today, Friday, November 17, 2017
WHERE: CNBC'S "Squawk Box"
Following is the unofficial transcript of a FIRST ON CNBC interview with Treasury Secretary Steven Mnuchin and CNBC's Andrew Ross Sorkin on CNBC's "Squawk Box" (M-F 6-9AM) today, Friday, November 17th. Following are links to video from the interview on CNBC.com: https://www.cnbc.com/video/2017/11/17/treasurys-steve-mnuchin-gop-plan-delivers-middle-income-tax-cuts.html & https://www.cnbc.com/video/2017/11/17/treasurys-steve-mnuchin-expect-tax-bill-on-president-trumps-desk-before-christmas.html.
All references must be sourced to CNBC.
ANDREW ROSS SORKIN: ALSO THE HOUSE PASSED ITS $1.5 TRILLION TAX CUT YESTERDAY. JOINING US RIGHT NOW TO TALK TAXES, TREASURY SECRETARY STEVEN MNUCHIN. GOOD MORNING TO YOU, MR. SECRETARY.
TREASURY SECRETARY STEVEN MNUCHIN: GOOD MORNING. GREAT TO BE HERE WITH YOU.
SORKIN: THANK YOU FOR BEING WITH US. WE HAVE SO MANY QUESTIONS ABOUT WHERE THIS ALL GOES FROM HERE, BUT I WANT TO START WITH THIS BECAUSE THERE SEEMS TO BE A BIG CONVERSATION ABOUT IT THIS MORNING – WHICH IS THAT WHEN YOU LOOK AT THIS PARTICULAR PLAN, THERE ARE STILL CONCERNS THAT OVER TIME AND YOU LOOK AT – YOU LOOK AT THE SENATE PLAN IN PARTICULAR, BUT OVER TIME BOTH PLANS ULTIMATELY ON THE INDIVIDUAL RATE THAT PEOPLE WILL PAY MORE, NOT LESS, WHAT DOES THE ADMINISTRATION THINK ABOUT THAT, AND HOW SHOULD WE?
MNUCHIN: I THINK THAT IS JUST NOT THE CASE. THE FOCUS OF THE PLAN REALLY IS MIDDLE INCOME TAX CUTS AND DELIVERING THOSE RIGHT AWAY, AND MAKING OUR BUSINESS TAX SYSTEM COMPETITIVE. AND I THINK YOU KNOW AS A RESULT OF THE RECONCILIATION PROCESS AND SCORING AND THE BIRD RULE, THERE ARE CERTAIN PARTS OF THIS THAT EXPIRE, BUT WE HAVE EVERY EXPECTATION THAT DOWN THE ROAD THAT CONGRESS WILL EXTEND THEM, AND THIS IS JUST AROUND THE SCORING ISSUES.
SORKIN: WHAT DO YOU SEE AS THE TIMELINE NOW? I KNOW WE TALKED ABOUT CHRISTMAS. BUT IN TERMS OF GETTING BOTH OF THESE, BOTH THE HOUSE AND SENATE, IN THE SAME PLACE.
MNUCHIN: WELL I THINK WE'RE REALLY EXCITED ABOUT THAT TIMELINE. I MEAN, YESTERDAY WAS OBVIOUSLY A HUGE DAY IN TERMS OF HAVING THE HOUSE PASS THE BILL. THAT'S A – A GREAT MOVE FORWARD. WE'RE GOING TO HAVE THE SENATE AS SOON AS THEY GET BACK FROM THANKSGIVING VOTE ON THE BILL, AND OUR EXPECTATION – WE'D GO TO CONFERENCE RIGHT AWAY, AND WE HAVE EVERY REASON TO THINK WE'LL GET IT TO THE PRESIDENT'S DESK BEFORE CHRISTMAS FOR HIM TO SIGN.
JOE KERNEN: MR. SECRETARY. I WANT TO COME AT IT FROM THE JUST THE OPPOSITE WHILE I HAVE YOU, AND THEN I'M GONNA GO LET ANDREW TAKE OVER AGAIN. BUT I GOT A CALL YESTERDAY FROM SOMEONE WHO LIVES IN NEW YORK, PRETTY WELL TO DO GUY, TALKED TO HIS ACCOUNTANT. HIS TAXES ARE GOING THROUGH THE ROOF, BASED ON THIS. BECAUSE HE DOESN'T – HE'S NOT ABLE TO WRITE OFF – HE'S LIKE – HE'S A REPUBLICAN, HE SAID I ELECTED REPUBLICANS, I VOTED BECAUSE OF EITHER TAX REFORM OR -- HE SAID I DON'T EVEN CARE IF MY TAXES GO DOWN. I JUST WANT TO -- I THOUGHT THEY WOULD AT LEAST STAY WHERE THEY ARE. HE SAYS HIS ACCOUNTSANT INFORMS HIM IT'S GOING TO BE HUNDREDS OF THOUSANDS OF DOLLARS MORE BASED ON THIS. THAT WOULD HAVE NEVER HAPPENED IN A REAGAN TAX PLAN. WHY – WITH THE HOUSE PLAN – HOW DO YOU ANSWER THAT? HE'S ACTUALLY GETTING A HUGE TAX INCREASE FROM A REPUBLICAN ADMINISTRATION.
MNUCHIN: WELL FIRST OF ALL, I'M SENSITIVE TO THIS ISSUE HAVING LIVED IN NEW YORK AND CALIFORNIA, AND I HAVE LITERALLY SPOKEN TO HUNDREDS OF BUSINESS PEOPLE IN BOTH THOSE STATES. SO, FIRST OF ALL, AS WE'VE SAID, THE OBJECTIVE OF THE PLAN IS TO SIMPLIFY TAXES AND LEVEL THE PLAYING FIELD. SO WE'RE GETTING THE FEDERAL GOVERNMENT OUT OF SUBSIDYIZING STATES, AND THAT OBVIOUSLY DOES IMPACT THE HIGH TAX STATES. HAVING SAID THAT FOR SOMEONE WHO MAKES $100,000, $200,000, $300,000 IN HIGH TAX STATES, THEY WILL GET TAX CUTS. FOR PEOPLE WHO MAKE $1 MILLION OR MORE, THEIR TAXES ARE GOING TO GO UP ON THE PERSONAL SIDE. NOW, HAVING SAID THAT, THEY'RE GOING TO GET THE BENEFIT OF BUSINESS TAX REDUCTION, WHICH WILL BE VERY, VERY GOOD FOR NEW YORK. THEY'RE GOING TO GET THE BENEFIT OF PASS-THROUGH REDUCTION, WHICH WILL BE VERY GOOD FOR SMALL AND MEDIUM SIZE BUSINESSES AND ENTREPRENEURS. SO –
KERNEN: ITS THE -- THAT'S THE GREATER GOOD, MR. SECRETARY. YOU HAVE TO CONVINCE THESE PEOPLE THAT THEY'RE PAYING HUNDREDS OF THOUSANDS OF DOLLARS MORE AND THAT, YOU KNOW, YOU CAN'T TELL THEM, WELL, YOU KNOW, BUSINESSES ARE GOING TO DO MUCH BETTER BECAUSE THEY'RE PAYING MUCH LESS. YOU SHOULD BE HAPPY ABOUT THAT. THAT'S LIKE THE GREATER GOOD. IT'S JUST -- I KNOW THERE'S -- YOU GOT TO WORK WITHIN THESE CONSTRAINTS, BUT, YOU KNOW, THE REPUBLICAN IDEA OF TAX REFORM, I DON'T THINK EVERYONE KNEW THAT THESE PEOPLE WERE GOING TO HAVE HUGE TAX INCREASES. I MEAN, ARE THEY -- IS IT PUNITIVE BECAUSE THEY MAKE TOO MUCH MONEY?
MNUCHIN: I DON'T THINK IT'S A QUESTION OF THE GREATER GOOD AT ALL. I THINK THERE ARE GOING TO BE LOTS OF COMPANIES IN NEW YORK THAT WHEN THEIR TAX RATES GO FROM 35% TO 20% CAN INCREASE WAGES. SO YOU'RE TALKING ABOUT, YOU KNOW, THE ELIMINATION OF STATE AND LOCAL TAXES, PROBABLY CLOSE TO ABOUT 4% IN NEW YORK. IN THE SENATE VERSION THERE'S A 1% REDUCTION. SO YOU'RE TALKING ABOUT POTENTIALLY A 3% TAX INCREASE FOR PEOPLE WHO MAKE $1 MILLION OR MORE. A LOT OF PEOPLE UNDERSTAND THAT THAT IS FUNDING LOTS OF MIDDLE INCOME TAX CUTS AND UNDERSTAND THAT.
SORKIN: MR. SECRETARY, ON THE PASS-THROUGH ISSUE BECAUSE IT CONTINUES TO BE AN ISSUE, THE ADMINISTRATION HAS TALKED A LOT ABOUT TRYING TO HELP SMALL AND MIDSIZE COMPANIES AND BUSINESSES. ACCORDING TO THE TREASURY DEPARTMENT, THESE ARE ESTIMATES IN 2015, NEARLY 70% OF INCOME FROM PARTNERSHIPS, WHICH INCLUDE LIMITED LIABILITY COMPANIES AND 66.9% OF S-CORPORATIONS, THE INCOME GOES TO THE TOP INCOME PERCENTILE. SO WHEN PEOPLE LOOK AT THAT, HOW DO YOU THINK ABOUT THAT ISSUE?
MNUCHIN: YEAH. I DON'T HAVE THE UPDATED STATISTICS IN FRONT OF ME, BUT I WAS LOOKING AT THEM YESTERDAY, AND I DO KNOW THAT 98% OF THE NUMBER OF PASS-THROUGHS HAVE $500,000 OR LESS OF INCOME. SO THE LARGE NUMBER OF PASS-THROUGH RETURNS ARE ALL $500,000 OR LESS. THOSE PEOPLE WILL GET SUBSTANTIAL REDUCTIONS, SMALL AND MEDIUM SIZE BUSINESSES. THE 2% OTHERS OBVIOUSLY EARN MORE THAN 2% OF THE INCOME. BUT AGAIN, THESE ARE ABOUT BUSINESSES THAT ARE GOING TO REINVEST IN THE BUSINESS THAT WILL BE GOOD FOR THE ECONOMY, GOOD FOR GROWTH, AND WE'RE GOING TO HAVE THE LOWEST PASS-THROUGH RATES WE'VE HAD SINCE THE 1930s.
SORKIN: AND MR. SECRETARY, WHILE WE HAVE YOU ON, I'M GOING TO ASK YOU TWO QUICK QUESTIONS. NICK MULVANEY WILL BE THE DIRECTOR OF THE CONSUMER PROTECTION BUREAU. HE ONCE SAID THAT THE CFPB WAS A SICK, SAD JOKE. HOW SHOULD AMERICANS THINK ABOUT THAT?
MNUCHIN: WELL, FIRST OF ALL, WE LOOK FORWARD TO THE PRESIDENT'S ANNOUNCEMENT AS TO WHO WILL BE THE INTERIM HEAD, AND THEN WE'LL BE WORKING WITH HIM AND WITH THE SENATE ON CONFIRMING SOMEONE. I THINK FROM OUR STANDPOINT, WE'VE SAID THERE ARE REFORMS THAT SHOULD GO ON AT THE CFPB, AND I HAVE CONFIDENCE IN WHOEVER THE PRESIDENT PICKS FOR THAT WILL DO A GOOD JOB.
SORKIN: AND THE LAST TIME I SAW YOU IN PERSON, WE WERE BOTH IN RIYADH. SINCE THEN, THERE HAS BEEN A LOT OF NEWS OUT OF SAUDI ARABIA, INCLUDING THESE ARRESTS AND NOW NEWS POTENTIALLY THAT SOME OF THOSE THAT WERE ARRESTED THEIR INCOMES ARE GOING TO BE – AND WEALTH IS GOING TO BE CONFISCATED. LOTS OF AMERICAN INVESTORS WERE IN RIYADH WITH US THINKING ABOUT INVESTING IN THAT REGION AND IN THAT COUNTRY IN PARTICULAR AND SAUDI ARABIA. THE PRESIDENT HAS BEEN VERY SUPPORTIVE OF THE LEADERSHIP THERE. WHAT IS YOUR TAKE ON WHAT'S HAPPENED THE LAST TWO WEEKS, AND DID YOU HAVE ANY SENSE OF IT? DID THEY TELL YOU WHAT WAS GOING TO HAPPEN WHEN YOU WERE THERE?
MNUCHIN: WELL, IT WAS A GREAT EVENT, AND IT WAS GREAT TO SEE YOU THERE. YOU KNOW, THE FOCUS FOR US WAS THE TERRORISTS FINANCING TARGETING CENTER. BUT THERE WERE AN ENORMOUS NUMBER OF INVESTORS THERE, AND I THINK THAT THE CROWN PRINCE IS DOING A GREAT JOB IN TRANSFORMING THE COUNTRY. I MEAN, THE STATISTIC HE MENTIONED IS REALLY INCREDIBLE. 70% OF THE COUNTRY WILL BE 30 YEARS OR YOUNGER. AS IT RELATES TO THE CORRUPTION CHARGES, WE DID NOT DISCUSS THAT WHILE WE WERE THERE, AND WE WE'RE OBVIOUSLY MONITORING THE SITUATION.
SORKIN: AND THEN, FINALLY, YOUR BOSS, OUR PRESIDENT, PRESIDENT TRUMP, HAS MADE A COUPLE OF COMMENTS ON TWITTER ABOUT AL FRANKEN, SENATOR AL FRANKEN. WANTED TO GET YOUR TAKE.
MNUCHIN: I'M GOING TO LEAVE THAT TO THE PRESIDENT. HE IS DOING A GOOD JOB ON TWITTER.
SORKIN: OKAY. SECRETARY MNUCHIN, WE APPRECIATE YOUR TIME THIS MORNING. THANK YOU.
MNUCHIN: THANK YOU.
SORKIN: YOU BET.
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