COLUMBUS — Despite differences between the House and Senate visions, U.S. Treasury Secretary Steven Mnuchin on Tuesday predicted President Trump will sign a tax overhaul package into law by year’s end.
“The House and the Senate fundamentally have the same plan,” he told the Ohio Council of Retail Merchants. “While there are slight variations, it’s the same objectives.”
As Mr. Trump returns from his Asia trip, he is banking on tax reform to give him his first significant legislative victory at home in the wake of high-profile failures to repeal the Affordable Care Act.
The House and Senate are operating on separate tracks with the lower chamber expected to vote Thursday and the upper chamber sometime after Thanksgiving.
Congress is trying to balance individual and corporate tax cuts, the potential impact on the national deficit, and elimination or reductions in popular deductions for such things as mortgage interest, local and state taxes, and historic preservation.
“There’s no question in my mind that over the last eight years this has been a great environment for rich people, but for the average worker, their wages have gone nowhere…,” Mr. Mnuchin said. “This is as much about creating tax cuts that will spur investment, but this is also about jobs and wages.”
Democrats, however, have accused Republicans of pursuing tax cuts for the wealthy and corporations at the expense of working-class Americans.
“If the driving force of this is a massive tax cut for corporations…, it’s very hard to see how they could dress that up in a way that Democrats would support it…,” Ohio Democratic Party Chairman David Pepper said outside the Athletic Club of Columbus where Mr. Mnuchin spoke.
“What’s driving this is…CEOs in rooms saying ‘This is important to us’ and donors saying, ‘If you don’t do this again, we’ll never support you…’,” he said.
Republicans counter that the changes will simplify the tax code, boost economic growth to 3 percent to 4 percent a year, and bring down the national deficit over time.
Mr. Trump has vowed to cut the highest corporate tax rate from 35 percent to 20 percent.
“During the campaign, the president wanted us to try to get down to 15 percent,” Mr. Mnuchin said. “We convinced the president that, in the context of $1.5 trillion, we couldn’t get down that low…We assured him that 20 was 20. Twenty was not a negotiation to go anything higher.”
Opponents, however, argue that the federal corporate tax law is so riddled with loopholes that most corporations pay well below 35 percent. They also don’t believe workers will benefit from tax breaks at the top.
“It didn’t work when George W. Bush tried it, and it didn’t work in the last seven years in Ohio,” Mr. Pepper said. “For seven years Ohio has seen this brand of trickle-down economics — raise taxes on people who don’t have as much through higher sales taxes (and) through higher lower taxes, take money from local governments that have had to raise taxes themselves, move that money to Columbus, and give it out as tax breaks on the high end.”
Mr. Mnuchin said he is “sensitive” to the controversy over getting rid of the federal tax deduction for state and local tax payments.
“Fundamentally, we believe that the federal government should get out of the business of subsidizing the states,” he said. “We need to create a more fair and level playing field and simplify the tax system and get rid of a lot of tax deductions.”
Jeff Erb, general manager of the Montpelier-based Main Stop convenience stores, had asked Mr. Mnuchin about the state tax deduction, and he generally liked his answer.
“I wonder if states like Ohio, who have managed our taxes pretty well, are being held hostage by states that haven’t managed their taxes as well…,” he said. “Couldn’t you say that right now we’re subsidizing New York? Since I’m from Ohio, I’m not opposed to flattening that out.”
Contact Jim Provance at: firstname.lastname@example.org or 614-221-0496.
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