Treasury Secretary Steven Mnuchin joins CBS's John Dickerson on 'Face The Nation' to discuss the tax reform plan that could pass in Congress on Tuesday.
STEVEN MNUCHIN, U.S. TREASURY SECRETARY: First of all, let me just say, this is a historic event. People said we wouldn't get this done. We're on the verge of getting this done, the single biggest change to the tax system ever that President Trump is going to sign this week. And his priority all along has been fix a broken system.
Over 90 percent of people will be able to fill out their taxes on a postcard. The corporate tax rate going from the highest in the world at 35 percent to 21 percent makes us competitive. And more important, we fix a system where we now tax on U.S. income, which is all about creating U.S. jobs. We are going to bring trillions of dollars back onshore.
DICKERSON: Let me ask you, though, about on the -- the top rate is going down. The president at one point said the wealthy won't be getting a tax cut. Now they will, as it drops from 39.6 to 37.
Now, that balances out the deduction in state and local, but only for those people who live in high-state and local-tax states. So, again to this question of priorities.
Mark Sanford, Republican from South Carolina, said: "From a truth-in-advertising standpoint, it would have been a lot simpler if we just acknowledged the reality on this bill, which is, it's fundamentally a corporate tax reduction and restructuring bill, period."
What's your response to that?
MNUCHIN: Not the case at all. Pass-throughs have the lowest rates that they ever had since the 1930s. That's a huge part of engine of growth of small- and medium-sized businesses that are going to create lots of jobs.
And this is about hardworking families that are going to see starting in February tax cuts. We're already working at the IRS to update the tax forms and update the tax charts. And they're going to see this in their paychecks in February.
DICKERSON: I guess the question is, it's not that the middle class will get no tax cuts. They will. They will get a tax cut.
But it's the size of the tax cut relative to the emphasis and size of what corporations will get through. Not every middle-class family has a pass-through, obviously.
Tom Cole, Republican from Oklahoma, told John Harwood of CNBC this: "It just seems wrong" when -- he was talking about the lack of tax cuts, say, help with payroll taxes, or the fact that the carried interest loophole remains.
He said: "It just seems wrong. We'd be better off if there were more populist victories in there."
The president ran as populist. The argument is, there's just not as much as there could be for the middle class in this, not that they get nothing, but that the emphasis is skewed.
MNUCHIN: I think that is just not correct.
And people are going to see this in their paychecks. This is about the middle class. This is about working families. This is about child tax credits that are going up significantly, as you mentioned, refundable parts of the tax credits going up significantly.
People are going to see their paychecks go up. People are going to see their wages go up. That's what this is all about.
DICKERSON: On the wages question, how soon do you think -- the argument you make is that, with corporations, the tax is lower, they will pass it on to workers in their wages, and then also they will spend money on plants and equipment. How soon do you think that will...
MNUCHIN: I think we will see that this year.
You already see the stock market at record highs. You see people's 401(k)s up substantially.
DICKERSON: But that's not wages. That's...
MNUCHIN: No, no, I'm just saying you already see companies in anticipation in the market. So you're going to see trillions of dollars come back, and I think you're going to see this year wages going up.
DICKERSON: Because Kevin Hassett, who is the chairman of the Council of Economic Advisers, said on this question of when businesses are going to pass this on to the middle class, he said: "If you go to the optimistic vied of the literature, it could take three to five years. If you go to the pessimistic side, it would about double that."
So that's optimistic three to five. So, this is being sold as a big Christmas present everybody is going to get, but really this benefit that will pass on in wages and plants and equipment, Kevin Hassett, the president's -- chairman of his economic advisers says three to five years in the best case.
MNUCHIN: Well, that's three to five years on this $4,500.
But you're going to begin to see it right away. So, you won't see it all come in. It will go in over three years, as Kevin anticipates.
DICKERSON: But for something that is being sold to people as wages are going to go up, happy days are here again, happy days, even in the best-case scenario -- and, obviously, there's lot of debate about whether this will even turn out the way you have argued -- even in a best-case, we're talking three to five years for broad shared middle-class prosperity as result of the theory this is based on.
MNUCHIN: Not the case at all.
You're going to see happy days starting in February, where hardworking families sees that they have more money. That's something that's absolutely critical. You're going to see cuts anywhere from $2,000 to $4,000 for medium families with two kids.
This is going to have a huge impact in the economy, and it's going to have a huge impact on American jobs. You're going to see that right away.
DICKERSON: OK, difference between what people see in their taxes going down vs. the paychecks.
MNUCHIN: That's correct.
DICKERSON: But let me ask you this question.
The president, another thing he campaigned on central to his campaign was that he was going to drain the swamp, get rid of special interests.
Public Citizen reports that -- lobbyists have to disclose things they're working on -- 6,243 lobbyists have worked on tax-related issues. That's more than half the lobbyists in Washington worked on this.
For a president who promised to drain the swamp, that seems like a lot of people working on taxes.
MNUCHIN: Well, I think if it was up to the president, there would be a lot fewer of them.
I mean, the reason why there's so many people working on it is, we have touched almost every single part of the tax code. So...
DICKERSON: Have the lobbyists been defeated in this case?
And if you look at the massive changes to this, we fixed a broken tax system. That's what this is all about.
DICKERSON: One -- Tom Cole talks about the carried interest loophole. That was something the president said that loophole let hedge fund managers get away with murder.
It's been tweaked a little, but it's still in there. Why was that worth keeping?
MNUCHIN: Again, that was up to the House and the Senate.
The president likes the overall bill. There's obviously little parts of this bill that he would have tweaked differently himself. The fact that it's moved from one year to three years is definitely a step in the right direction, and the fact that it impacts a lot of small real estate developers.
But, as you said, the president couldn't get every single little detail he wanted. That was one of them that got left out.