US Treasury’s Mnuchin: Can’t guarantee tax cut for entire middle class

WASHINGTON: US Treasury Secretary Steven Mnuchin said one of the top goals of the Trump administration’s tax plan is to help the middle class, but he could not guarantee that every middle- class family would receive a tax cut.

“It is our objective that the entire middle class will get a tax cut,” Mnuchin said on ABC’s ‘This Week’ programme.

“You cannot make guarantees because every single person’s taxes are different, people take advantage of different things.”

President Donald Trump last week outlined his plan, which includes reducing the corporate income tax rate to 20 per cent, establishing a new 25 per cent tax rate for pass-through businesses and lowering the top income tax rate for individuals to 35 per cent.

A report on Friday from the non- profit Washingtonbased Tax Policy Center found that taxpayers in the top 1 per cent income bracket – above US$730,000 – would receive about 50 per cent of the total benefit from the overhaul, with their after-tax income forecast to increase an average of 8.5 per cent.

The group said about 12 per cent of taxpayers would face an average tax increase of roughly US$1,800.

This includes more than a third of taxpayers making between about US$150,000 and US$300,000, as most itemized deductions, including for state and local taxes, would be repealed.

Mnuchin and other Trump administration officials defended the plan, saying it is not aimed at helping the rich, whi le acknowledging the details were in flux.

“The objective of the president is that rich people don’t get tax cuts,” Mnuchin said. “As we go through this process, we will explain to the American public how this works.”

Mnuchin was also asked on whether a proposed new rate of 25 per cent for so- called passthrough businesses would end up being exploited by wealthy people looking to lower their tax bills.

About 95 per cent of American businesses are pass-throughs such as sole proprietorships, partnerships and S-corporations, according to the Brookings Institution, a Washington think tank.

The name comes from the profits and losses of such businesses that pass through directly to their owners, unlike public corporations.