Treasury Secretary Steve Mnuchin joins CNN's Jake Tapper to discuss the final version of the Republican tax reform plan. Tapper grills Mnuchin about whether the plan is fair.
TAPPER: Let's turn to taxes.
As he was leaving for Camp David yesterday, President Trump touted the new Republican tax bill as a big win for the middle class.
Take a listen.
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: This is going to be one of the great gifts to the middle-income people in this country that they have ever gotten for Christmas.
TAPPER: The tax bill just landed on Friday, so a lot of people don't even know what's in it.
Maybe you can help us. What percentage of this tax cut is going to people who make, say, around $200,000, $250,000 a year?
MNUCHIN: Well, this is really historic. This is the biggest single change to the tax system, in fixing a broken tax code, that we have ever had.
A family of four making $75,000 will get about a $2,000 tax cut, and a family of four making $150,000 will get almost $4,000.
Plus, we think, as a result of lowering business taxes, wages will go up. So, this is a huge opportunity for creating jobs, creating tax cuts for working families.
TAPPER: But do you have any idea what percentage is going to people who make less than $250,000, less than $200,000 a year?
Because I understand that there is a huge tax cut going to corporate America, and I understand that every tax bracket is getting a tax cut. But what percentage is going to the middle-income people that President Trump keeps talking about?
MNUCHIN: Jake, the number is very complicated, and different people will present it different ways.
As you know, there are distribution of taxes. The distribution is staying very similar. And this is all about fixing a broken tax system. So this will be very large tax cuts for working families and very large tax cuts for businesses to make them competitive.
We have a broken business tax system. We had one of the highest rates in the world. We're coming down to 21 percent, very competitive. And, more importantly, we're going from a worldwide broken system to a U.S., job-centric system that's going to bring trillions of dollars of cash back here to be invested here.
TAPPER: One of the biggest changes from the House and Senate proposals is that the final plan lowers the top tax rate for individuals from 39.6 percent to 37 percent, and it raises the threshold at which the top rate kicks in to $600,000 for married couples.
The bill also raises the threshold for the estate tax to $11.2 million.
Take a listen to something President Trump said in September.
TRUMP: The rich will not be gaining at all with this plan. We're not -- we're looking for the middle class, and we're looking for jobs.
TAPPER: Obviously, the middle class is getting a tax cut. You outline that way, but to say the rich will not be gaining at all with this plan, I don't see any way in which that is true.
MNUCHIN: Well, Jake, let me explain to you how that is true, because we're getting rid of lots and lots of deductions.
The biggest is, we're capping state and local reductions at $10,000. So one of the things we were very sensitive to is the high-tax states make up a big part of the economy. So, even lowering the top rate from 36.6 to 37, in the high-tax states, actually, rich people taxes will be going up.
And the reason why we lowered the top rate is because we're very sensitive to that's a very large part of the economy. But the president was right. There are people who are rich people that are having their taxes going up.
TAPPER: According to "The New York Times," low-income families who claim the Earned Income Tax Credit would lose out on this bill to the tune of $19 billion over the next decade because of the new way tax brackets are indexed to inflation.
Essentially, by adopting this method, it doesn't increase as quickly. The proposal makes it so people will enter the high tax brackets faster.
So, if this is a plan that will help people keep more of their money and will help lower- and middle-income people, why include this provision that will ultimately hurt lower- and middle-income Americans, at the same time that corporate America is getting this huge tax break?
MNUCHIN: Jake, you're just looking at one little part of the bill, and you have got to look at the bill overall.
So, for low-income people and middle-income working families, their taxes are going down. Their tax credits are going up. The child tax credit is going up significantly. So they're getting big tax cuts. That's what this is all about.
TAPPER: But the Earned Income Tax Credit, but the chained inflation part of that, that's going to hurt them down the road.
MNUCHIN: As I said, you're looking at one component of it, and you have to look at the total package that they're getting.
And they're getting significant tax cuts.
TAPPER: The Treasury Department, your department, released some analysis this week claiming the tax plan will pay for itself; not only that, it will raise almost $300 billion in new revenue.
The analysis was criticized, even by some conservative economists, for factoring things savings from things such as regulatory reform and welfare reform, things that haven't passed in Congress yet.
You said that more than 100 staff members from the Treasury Department were working round the clock on running scenarios for the analysis, and yet there was only this one-page report.
Is there going to be a more detailed analysis forthcoming?
MNUCHIN: Jake, there's a massive model that is behind it.
And what was important is to publish the reports. The Treasury has never produced a detailed model beforehand.
But let me just walk you through the numbers quickly, OK? During the Obama administration, for the first term, they predicted 3 percent growth. When they left, they predicted 2.2 percent growth.
I have been very consistent in saying the difference between 2.2 and 2.9 is $1.8 trillion. And we only need half of that or about a trillion dollars to get to break even. And that half of the growth will come from corporate tax reform alone.