Treasury Secretary Steven Mnuchin said Thursday the administration is committed to getting major tax reform legislation through Congress by August. He predicted that President Donald Trump’s economic proposals will be able to boost growth significantly to annual rates above 3 percent.
Mnuchin said that tax reform is the administration’s top economic priority and the goal is to have a measure approved by the time Congress takes its August recess.
“We are committed to pass tax reform,” Mnuchin said in an interview on CNBC. “It’s going to be focused on middle income tax cuts, simplification and making [the U.S.] business tax competitive with the rest of the world, which has been a big problem.”
He said implementation of Trump’s economic program including tax cuts and deregulation would make growth in a range of 3 percent to 3.5 percent “very achievable.”
During the campaign, candidate Trump had set a goal of achieving growth, as measured by the gross domestic product, of 4 percent or better. The country has struggled through the weakest recovery in the post-World War II period in terms of growth, with GDP averaging annual gains of just above 2 percent in the seven years since the recession ended in mid-2009.
“We have underperformed where we need to be,” Mnuchin said. “We believe we can be competitive and get back to sustainable growth of 3 percent or more.”
The GDP grew by just 1.6 percent last year, and many forecasters are predicting growth this year at an only slightly better pace of 2 percent to 2.5 percent. Mnuchin said it would take time for Trump’s economic program to translate to faster growth. But he said positive effects would be realized by next year.
Mnuchin’s prediction of an August passage of a tax plan could prove optimistic given that House and Senate Republicans seem sharply divided over key elements of the program. GOP lawmakers in the Senate have expressed opposition to a House proposal to replace the current 35 percent tax on corporate profits with a border adjustment tax.
Under the House proposal, American companies that produce and sell their products in the United States would pay a new 20 percent tax on the profits from those sales. But if the company exports its products, the profits from those exports would not be taxed by the United states. However, foreign companies that import goods into the United States would have to pay the 20 percent tax.
Mnuchin did not commit to supporting the border adjustment tax but said the administration was “looking closely” at the issues raised by this type of tax. He said he has discussed those issues with two supporters of the approach, House Speaker Paul Ryan and House Ways and Means Committee Chairman Kevin Brady, R-Texas.
“We think there are some very interesting aspects of it. We think there are some concerns about it,” Mnuchin said.
He said one thing the administration wants is a combined plan that would draw support from lawmakers in both the House and Senate.
“We’re working behind the scenes very carefully. We’re running a lot of numbers and we’re taking into account a lot of issues,” he said. He said the administration hoped to have a proposal ready to unveil in “the near future, and we’re committed to get this passed by August.”
In a separate interview with the Fox Business Network, Mnuchin said the administration was focused on an “aggressive timeline” to enact tax reform, calling it critical to stimulating economic growth.
“There’s trillions of dollars offshore that will come back, and this will create jobs [and] this will create investment and we need to make sure our U.S. businesses are competitive,” Mnuchin said.