Trump Treasury Pick: No “Absolute” Tax Cut for Wealthy
President-elect Donald Trump’s choice for secretary of the Treasury seemed to contradict Trump’s tax proposals in declaring that the wealthy shouldn’t expect an “absolute tax cut” and that the bulk of the cuts would benefit the middle class, CNBC reports.
Steven Mnuchin, after confirming to the television news channel that he had been selected to lead the Treasury Department under Trump, says the bulk of the tax cuts will benefit the middle class. As for upper-income Americans, they can expect tax cuts to be offset by lower allowed deductions, he tells CNBC. Mortgage interest deductions, for example, will be capped under Trump, Mnuchin told CNBC.
The Treasury pick insists that “this is a middle-income tax cut” in an attempt to refute a claim that Trump’s cuts would lead to middle class Americans, particularly single parents, paying more under the president-elect, according to the news channel.
But an analysis of Trump’s tax proposal by the Tax Policy Center had concluded that the top 0.1% of American taxpayers would see an average 14% increase in after-tax income, according to CNBC. The same analysis found that the middle fifth of earners would only get an average 1.85% tax cut while the poorest Americans would receive a less than 1% cut in their taxes.
Gene Sperling, a former economic policy aide to President Barack Obama, tells the Wall Street Journal that Trump’s plan was found to give “more tax cuts to the top 1% than the bottom 99% combined.” Trump’s other tax proposals include a reduction in the corporate tax rate from 35% to 15%, a repeal of the estate tax as well as the alternative minimum tax, a drop in the capital gains tax, and reductions in both the top business income and the top ordinary income tax rates, from 39.6% to 15% and from 36.9% to 33% respectively, the Journal writes.
One of Trump’s advisors on his tax plan, Stephen Moore, tells the paper that Trump’s proposal is meant to offset revenue losses from lowering the top tax rate on ordinary income with caps on deductions. But the cap isn’t designed to offset cuts on business income nor estates and capital gains taxes — all of which will mostly go to top earners, independent analysts tell the Journal.
The wealthiest American families, meanwhile, are re-evaluating their money transfer strategies or pushing them to next year in the hopes that they can get a $21 billion benefit under Trump, Bloomberg writes. That’s the figure that the Internal Revenue Service collected in gift and estate taxes in fiscal year 2016, according to Treasury Department data cited by the news service.