NEW YORK — It might not be possible to lower the corporate tax rate from 35 percent to 15 percent as President Trump has hoped, Treasury Secretary Steven Mnuchin said Tuesday.
“I don't know if we will be able to achieve that, given the budget issues,” Mnuchin said referring to the goal of reaching a 15 percent tax rate. “But we're going to get this down to a very competitive level, and the exact number is less important. And what's more important is making sure we have a competitive field.”
Pressed on whether lowering the corporate tax rate to the mid-20s would be acceptable, Mnuchin demurred, but he said that simply passing tax reform would be a “win.” “Passing tax reform, which hasn't been done in 31 years, that's a win. And what the exact number is, we'll see,” he said at the CNBC Institutional Investor Delivering Alpha conference.
Mnuchin and National Economic Council Director Gary Cohn are scheduled to meet with congressional leaders Tuesday to discuss the Republican tax cut plan. The Trump administration has made completing a package of tax cuts a top priority, but the task is expected to be complicated by Democratic resistance and a divided Republican Party.
“We're going to get this done by the end of the year,” Mnuchin said.
Mnuchin said the administration is sticking by another Trump priority: eliminating the favorable tax treatment for hedge fund managers. Such Wall Street financiers pay as little as 15 percent on their profits under the “carried interest loophole.”
“The president has made it very clear for hedge funds, they will not have the benefit of carried interest,” Mnuchin said.
The favorable tax treatment would still be available to other types of companies “that create jobs,” he said, though he did not offer details. “We want to make sure that we encourage jobs, so that is something we are working on,” he said.
Congress’s Joint Committee on Taxation has estimated that changing the treatment of carried interest could raise about $16 billion over the next decade. Academics who have studied the issue say the figure could be much higher, $180 billion.
“I know this issue is incredibly important to everyone in this room,” Mnuchin said to laughs in the crowd, which was full of hedge fund industry executives. “It is less important to the American people.”