Mnuchin: No Tax Cuts For Wealthy, Benefits For Middle Class, $1 Trillion Cut In Deficit


This Week host George Stephanopoulos grills Treasury Secretary Steve Mnuchin over the Trump tax reform proposal. Mnuchin claims the tax plan will include no tax cuts for the wealthy, benefits for the middle class and a near $1 trillion cut in the deficit. However, Mnuchin said while the objective is a tax cut for the middle class, he could not make a "guarantee" that would happen.

GEORGE STEPHANOPOULOS, THIS WEEK: Let's take it now to the president's Treasury secretary, Steve Mnuchin, joining us this morning.
Mr. Secretary, thank you for joining us this morning.

We just heard the president right there, also, you and your colleagues have said the wealthy will not get a tax code under the plan.

But it's really hard to see how that can possibly be true, given the fact that your plan proposes cutting the top rate, eliminating the estate tax, eliminating the alternative minimum tax, cutting that rate on pass-through entities.

And the non-partisan Tax Policy Center calculates that 80 percent of the benefits will flow to the top 1 percent. We're going to show that chart right now.

Almost every group getting a tax cut, but the wealthiest getting the most.

That's just a fact, isn't it?

STEVE MNUCHIN, SECRETARY OF TREASURY: George, first of all, it's great to be with you this morning. And that's not a fact.

As we release the details of the plan, we'll show the -- all the different impacts to different people. And as the president has said all along, the changes to the income tax system are meant to create middle income tax cuts and also make corporate and business tax competitive so we can bring back tons and tons of jobs and capital to this country.

STEPHANOPOULOS: I know that's the objective, but based on the evidence you've put out so far, all those cuts I just talked about, that will benefit the wealthiest the most.

MNUCHIN: Well, George, I just don't think that's the case. As we've talked about changes in the the top bracket are offset with elimination of almost every single type of deduction other than charitable giving and the mortgage interest deduction.

And, you know, this has impact to different people in different states, but again, we'll go through all the details as we go through the Congressional process of the House and the Senate and we'll show all the distributions.

And as it relates to pass-throughs, this is about creating jobs.

A huge component of the businesses in this country are pass-throughs and we want to make sure they have the necessary tax relief to go out and hire more workers and invest more capital.

STEPHANOPOULOS: You know, Secretary, I just don't understand how you can say, based on everything you've put out so far, that it's not a tax cut for the wealthy. Even the vice president has said these are across the board tax cuts. The wealthy pay most of the taxes. They are getting tax cuts there. They are going to get benefits.

MNUCHIN: Well, George, in the high tax states, the impact is about 5 or 6 percent. So if we cut the rate down to 35 percent, that's actually an increase for the wealthy in the high tax states. And as we've said, we're considering what we do. If there is a need for a fourth bracket to create more relief.

So this will all continue to go through the Congressional process.

STEPHANOPOULOS: But eliminating the estate tax will only go to the wealthiest Americans, those that have estates greater than $11 million.

MNUCHIN: Well, you are correct in that sense. And, again, we've been talking about the income tax system. As it relates to estate tax, you know, the death tax, we believe that people get taxed once and not twice. And that will enable them to keep lots of family businesses passed along.

But the estate tax, you are correct. The majority of the estate tax is paid by the wealthy. So we're focused on changes to the income tax system.

STEPHANOPOULOS: But you've proposed to eliminate the estate tax.

On those changes to the income tax system, if I understand you correctly, you say the objective is that the wealthiest will not get a benefit.

So are you saying that the president is going to veto a final bill if it provides a tax cut to the wealthiest Americans?

MNUCHIN: The president very want -- much wants to get tax reform done, because it's critical to the growth in the economy, and that's something we've been talking about since the campaign.

We fundamentally believe we can get back to sustained 3 percent GDP or higher, which adds literally millions and millions of jobs and over $10 trillion to GDP. And that's our focus.

So the president wants to get tax reform. We're working with the House and the Senate and we hope to get on his desk to sign in December.

STEPHANOPOULOS: Right. But he's also said, and you've just repeated, that he doesn't want the wealthiest Americans to get a benefit from this tax reform plan.

So if Congress sends him a bill that provides benefits to the wealthiest Americans, will the president veto it?

MNUCHIN: George, I think the president will look at the bill when it comes in its entirety. Again, as we've been consist, the president's objective -- and I think Congress has heard that -- is to create middle income tax cuts and not tax cuts to the wealthy.

And as I just mentioned, the existing plan actually has tax rates going up in many, many states. So we're sensitive to the impact to the economy. We want to get the federal government out of the business of subsidizing the states. We think that's the right thing to do. And it will have impact on different states.

So we'll continue to look through this as we go through the process.

STEPHANOPOULOS: There could be that impact, but as -- based on the evidence you all have put out so far, independent analysts have said that the benefits are going to go to the wealthiest.

I want to go to the benefits for President Trump personally, because he himself has said that he's not going to benefit from this tax plan. Again, that's hard to see how that's true, given the estate tax, the elimination of the AMT, which has benefitted the president in the past, the cut in the top rate. But, also, we talked about these pass-through entities.

And based on the president's financial disclosure form, just from this year -- we want to put it up right now -- he had about -- more than $500 million in taxable income from those pass-through entities taxed at 39.6 percent.

You cut that to 25, that's a savings of $75.7 million, based on the president's financial disclosure form last year.

MNUCHIN: George, as we've said all along, as we change the pass-through rate, it's very, very important that we have guard rails around those rules so exactly as you've said, this isn't about creating a tax cut for the rich.

So we spent a lot of time with the staff at the House and Senate. We're continuing to work on those rules. But we're going to make sure that that's not a way that the rich can use to pay low taxes than they should, whether it's the president or anyone else.

STEPHANOPOULOS: Well, but based on last year's form, he would have gotten that benefit.

So how are Americans going to know whether or not the president gets this benefit if he doesn't release his tax returns?

MNUCHIN: George, that's just not fair, because, again, we haven't published the rules as to what's going to the pass-through rate. So you're making certain assumptions that I don't think are correct.

STEPHANOPOULOS: I wouldn't need to make the assumptions if we had the president's tax returns. And I guess that's the question. The president himself has said publicly he's not going to get a benefit from this tax plan.

My question to you is, how are the American people going to know that if he's not, releasing his tax returns? MNUCHIN: Again, George, I think the American public will be comfortable with the information that they have. Now, you've pointed out the pass-through rate is something we need to be careful about, as you've just described. And we're going to make sure that there's the proper rules. There's going to be full transparency as we go through the legislative process, what those rules are, so that rich people can't take advantage of it.

STEPHANOPOULOS: You talked about transparency, but in the interests of transparency, can you guarantee that the president won't get a tax cut under his plan?

And how will you demonstrate it?

MNUCHIN: Again, as I've said all along, the objective of the president is that rich people don't get tax cuts. And we're perfectly comfortable, as we go through this process, we'll explain to the American public how that works and we'll give plenty of examples.

STEPHANOPOULOS: Will you give the information about the president himself so he can back up the claims that he's made that he's not going to get a tax cut under this plan?

MNUCHIN: George, I can't comment on what the president will do or what he won't do on that. But again, I'm perfectly comfortable that the American public is going to understand this as we go through this process, because what this is about is creating middle income tax cuts and creating a corporate tax system that's competitive.

We have one of the highest tax rates in the world. We have a concept of deferral. Our companies leave trillions of dollars offshore.

Those are jobs -- that's money we want to back. We're going to create expensing that incentivizes companies to spend capital here and create jobs.

And the American public understands. This is about jobs. This is a jobs bill.

STEPHANOPOULOS: Well, I don't understand how you can provide that assurance to the American public about the president and the wealthy if you don't release his tax returns.

But you also talk about the goal being a cut in middle class taxes. And under the plan, from what we can tell so far, most middle class families will get a tax cut, but there also appears to be many middle class families who will get a tax increase.

The Tax Policy Center says that by 2027, taxes would rise for regular one quarter of taxpayers, including nearly 30 percent of those with incomes between $50,000 and $150,000, and 60 percent of those making between $150,000 and $300,000.

The top tax official here in New York City has said that about three million people in New York will see their taxes go up because of the elimination of the state and local tax deduction. Nearly half of the middle class residents in New York earning between $50,000 and $75,000 a year.

So some middle class Americans, including many here in New York, will get a tax increase.

MNUCHIN: Well, I don't know how the Tax Policy Center can publish those figures, since they don't have all the details, including the brackets. People like the Tax Foundation and others have waited, which I think is responsible, when we release all the information...

STEPHANOPOULOS: But that's on you.

MNUCHIN: -- and it's a...

STEPHANOPOULOS: -- isn't it...


STEPHANOPOULOS: -- release the details?

MNUCHIN: Yes, well, we're working with the House and Senate. It's going through committees. And those details are going to be released. And we've said that continuously.

And as it relates to New York, I'm sympathetic to the issues in New York. As you know, I've paid taxes in New York and California, which are two of the highest taxed states. And, you know, if we eliminate the subsidies to New York and California, that creates certain issues.

But I don't think it's fair that a bunch of other states are subsidizing New York and California. And, you know, that's going to be an issue for me, as well, as I pay taxes there.

STEPHANOPOULOS: So if taxes go up on middle class New Yorkers, so be it, middle class Californians?

MNUCHIN: No, that's not what I said. What I said is we're trying to create certain adjustments so that the middle class and New York and California don't get hit hard by this.

But there are issues, as you've said, when we change a system where we eliminate the tax subsidy of certain states, that will impact different people in different states. And we're working through the details of that.

That's why, as we haven't released the full plan. We're working with the committees. We want the committees to understand this. And we're very focused on middle income tax relief.

STEPHANOPOULOS: But you can't guarantee that all middle class individuals will receive a tax cut, can you?

Some will get a tax increase.

MNUCHIN: Yes, it is our objective that the entire middle class does get a tax cut. And that's something we're working on the details.

As you said, you can't make guarantees, because every single person's taxes are different. People take advantage of different things, so we can't make that guarantee, but we can say that's our objective and that's what we're working to and we want to protect the middle class.

We went to Indiana last week. We had a specific family that's getting a $1,000 cut under our plan. We had businesses there that are getting tax cuts so that they can grow jobs. And that's what we're trying to do.

STEPHANOPOULOS: Again, that's what you're trying to do, but again, let me go back to the question similar to the one I asked earlier, will the president veto a bill if it comes back to him, with middle class tax increases for some Americans?

MNUCHIN: George, the president isn't setting any criteria upfront as to what he's going to veto and what he's not going to veto. What the president is doing is working with Congress. It's been over 30 years since we've had tax reform. We have a broken system. We have to fix it.

We have to create jobs. We have to simplify taxes. And we've got to make a system that works for all Americans and all American business. This is an American jobs act and the president has worked -- is going to work with Congress to get these objectives.

And as I said, hopefully we'll get something on his desk to sign so we can continue to have the economic growth in this country we need.

STEPHANOPOULOS: One of the other big questions is impact on the deficit. We've already seen Senator Bob Corker say he's not going to vote for any tax cut that increases the deficit.

Let's look.


SEN. BOB CORKER (R), TENNESSEE: No way will Bob Corker is going to vote for a tax reform bill that I think in any way is going to add to the deficit. It's not going to happen, never. It's never going to happen. Never, never, ever.


STEPHANOPOULOS: Again, based on the details you've provided so far, there's about $2 trillion more in tax cuts than closing of loopholes and ending deductions.

Can you commit that the bill will not increase the deficit?

And if it does, are you concerned you're going to lose the votes of Senator Corker and others?

MNUCHIN: Well, I've had the opportunity with Senator Corker and others and walked them through the math. And here's the math, George, so you understand it.

Our current plan, on a static basis, will increase the deficit by $1.5 trillion that will be offset by -- there's a $.5 trillion difference between what we call the baseline in policy, which is rolled over.

So that $1.5 trillion should be addressed down to $1 trillion. And we believe there will be $2 trillion of additional growth.

So under our plan, we believe this will cut the deficit by $1 trillion and that's what we're focused on.

And that's with a conservative, 2.9 percent GDP over the 10 year period of time.

STEPHANOPOULOS: You say that's conservative, but if the median forecast from the Fed is 1.8 percent over time and 21 out of 26 economists surveyed by Bloomberg say that this will increase the deficit and your growth projections are too big.

MNUCHIN: Well, the current GDP estimates by all those people are because they're not taking into account what the administration is doing with their regulatory relief, trade re-negotiations or tax reform. And we just had -- we've had 3 percent GDP now, Bruce, because you see the economy is anticipating and reacting to President Trump's plan.

But you're correct, if we don't pass through on this tax reform, we want to get this growth. And that's why we need it. That's why this is critical to get done.

STEPHANOPOULOS: And if you don't get the growth, will you scale back the spending, scale back the tax cuts?

MNUCHIN: Again, we're confident we'll get the growth but if we don't get the growth, that's obviously something that can be changed over time.

STEPHANOPOULOS: Mr. Secretary, thanks for your time this morning.

MNUCHIN: Thank you very much.

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