Mnuchin: Tax Cuts Could Be Backdated for 2017

Mnuchin: Tax Cuts Could Be Backdated for 2017

Lucy Nicholson

Treasury Secretary Steven Mnuchin said Tuesday that tax reform is "the most important issue for the American economy" right now and the major focus the Trump administration.

Speaking at the Delivering Alpha conference, hosted by CNBC and Institutional Investor, Mnuchin made several noteworthy comments about the White House's current approach to tax reform:

* The administration still wants tax reform to happen quickly, before the end of the year.

* Tax reform may be backdated to apply to the current year. Mnuchin claimed this would “be a big boon for the economy.”

* President Trump’s target of 15 percent for the top corporate tax rate will be hard to hit: "I don't know if we'll be able to achieve that given the budget issues. But we're going to get this down to a very competitive level."

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* The administration still wants to eliminate most deductions, including those for state and local taxes. Mnuchin said that he hopes the reduction in federal rates makes up for the loss of those deductions.

* While White House officials hope to work with Democrats to get 60 votes for their tax reform plan in the Senate, they are open to the possibility of using the reconciliation process to pass tax reform with just 50 Republican votes.

* The administration still wants permanent tax reform, but will accept temporary changes if it has to. Mnuchin said, “Permanent is better than temporary, and temporary is better than nothing.”

* While the tax plan will lower taxes on businesses, some service companies will be excluded from using the lower rates, to avoid creating loopholes that allow businesses to take advantage of lower tax rates on “pass-through” entities. “If you’re an accountant firm and that’s clearly income, you’ll be taxed an income rate, you won’t be taxed a pass-through rate. If you’re a business that’s creating manufacturing jobs, you’re going to get the benefit of that rate because that’s go[ing] to be passed through to help create jobs and better wages.” Mr. Mnuchin said, according to The Wall Street Journal.

* Hedge funds will lose the carried-interest tax break. “The president has made it very clear that for hedge funds, they will not have the benefit of carried interest,” Mnuchin said, according to MarketWatch. However, the tax break may still be available for “other entities that create jobs.”

Mnuchin was also asked about health care. The Treasury secretary said that while the president is still interested in health care reform, it’s not currently a top priority.