Mnuchin pitches tax pro­pos­als in Ohio

Dayton Daily News - - LOCAL & STATE - By Laura A. Bischoff

As law­mak­ers in COLUM­BUS —

Washington de­bate the mer­its of com­pet­ing GOP tax plan pro­pos­als, U.S. Trea­sury Sec­re­tary Steven Mnuchin pitched tax re­form to Ohio re­tail­ers Tues­day as a tool to spur job creation and eco­nomic growth.

“We fun­da­men­tally think that we need to get back to sus­tained eco­nomic growth of 3 per­cent GDP or higher. For the eight years, we’ve been around 2 per­cent and that’s not the new nor­mal as far as we’re con­cerned,” Mnuchin said to the Ohio Coun­cil of Re­tail Mer­chants.

Both the U.S. House and Se­nate are work­ing on tax plans that would re­vamp the rules on de­duc­tions, brack­ets and rates. The last ma­jor over­haul of the fed­eral tax code oc­curred in 1986.

“Our eco­nomic plan is re­ally fo­cused around tax re­form, reg­u­la­tory re­lief and trade,” Mnuchin said. “A big part of that is the tax re­form and tax cuts that we are hop­ing to get passed and signed by the pres­i­dent in De­cem­ber.”

At the cen­ter of both pro­pos­als is a plan to slash the cor­po­rate tax rate from 35 per­cent to 20 per­cent, which Mnuchin says will al­low com­pa­nies to rein­vest sav­ings into hir­ing work­ers or buy­ing new equip­ment.

He ar­gued the plans are not aimed at ben­e­fit­ing the wealthy, as many crit­ics have said.

“There is no ques­tion in my mind that over the last eight years, this has been a great en­vi­ron­ment for rich peo­ple. But for the av­er­age worker, their wages have gone nowhere,” he said. “And this is some­thing that I re­ally saw, as I trav­eled around the coun­try with the pres­i­dent during the cam­paign. This is as much about cre­at­ing tax cuts that will spur in­vest­ment and also about jobs and wages.”

Ohio Demo­cratic Party Chair­man David Pep­per coun­tered that the Repub­li­can-backed tax re­form re­lies on trickle-down eco­nomics that he says have long failed to pro­duce promised jobs and growth. “This thing is ba­si­cally a huge tax cut for cor­po­ra­tions and peo­ple do­ing very well,” he said. “I think ev­ery­thing else is try­ing to dress it up to make it seem like some­thing it’s not.”

Pol­icy Mat­ters Ohio, a left lean­ing think tank, said the plans will de­liver huge cuts to wealthy Amer­i­cans and cor­po­ra­tions and pro­vide mod­est or neg­li­gi­ble ben­e­fits to ev­ery­day Ohio fam­i­lies.

“For many fam­i­lies, the value of any tax cut they get will be wiped out as the deficit ex­plodes, driv­ing pres­sure to cut health care, nu­tri­tional as­sis­tance, fi­nan­cial aid and fund­ing for clean wa­ter and safe roads,” said Wendy Pat­ton, of Pol­icy Mat­ters Ohio, in a writ­ten state­ment.

Un­der the Se­nate plan, ac­cord­ing to the group, the rich­est 1 per­cent in 2019 would get an av­er­age tax cut of $32,300, while Ohio house­holds in the mid­dle 20 per­cent would see a sav­ings of $630.

Repub­li­cans say the tax cuts will spark eco­nomic growth, off-

set­ting the cost. But the Se­nate plan could add as much as $1.5 tril­lion to the na­tion’s pub­licly held debt during the next decade, ac­cord­ing to at least one pro­jec­tion. And the Con­gres­sional Bud­get Of­fice has pro­jected a $10 tril­lion in­crease in the deficit over 10 years if there is no change in the tax laws.

Parts of each plan are con­tro­ver­sial. The Se­nate plan calls for end­ing a pop­u­lar de­duc­tion used by one in four Ohio house­holds that lets them write off the amount of money they pay in state, lo­cal and prop­erty taxes from their an­nual fed­eral in­come tax re­turns. This is par­tic­u­larly pop­u­lar in states with high prop­erty val­ues and high tax rates.

Mnuchin, who noted that he has lived in two of the high­est tax states in the coun­try, said, “Let me just say, fun­da­men­tally we be­lieve that the fed­eral govern­ment should get out of the busi­ness of sub­si­diz­ing the states, that we need to cre­ate a more fair and level play­ing field and sim­plify the tax sys­tem and get rid of a lot of de­duc­tions.

“Now, hav­ing said that,” he added, “we are sen­si­tive to the im­pact on the high tax states.”

PABLO MARTINEZ MON­SI­VAIS / AS­SO­CI­ATED PRESS

The prob­lem with the ex­ist­ing tax code is it is so com­pli­cated and there are so many dif­fer­ent as­pects of it that it im­pacts ev­ery sin­gle in­di­vid­ual slightly dif­fer­ently, Trea­sury Sec­re­tary Mnuchin says.

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