Mnuchin’s talk of tax plan ‘soon’ stirs markets and sceptics
TREASURY Secretary Steven Mnuchin sent US stock prices to a daytime high Thursday when he said the Trump administration will produce an ambitious plan to overhaul the US tax code “soon.”
But it’s not the first time the administration has promised an imminent plan, and the obstacles to a sweeping tax- code re-write of the sort Mnuchin described last Thursday haven’t gotten any smaller.
A key Senate committee has yet to see final details of a White House plan, a congressional aide said.
And tax-related challenges presented by the 2010 Affordable Care Act remain in place amid Republicans’ disagreement on how to dismantle the health- care law they’ve criticised for years.
On top of that, House Speaker Paul Ryan’s proposal to tax US companies’ domestic sales and imports – while exempting their exports – has stirred controversy among US businesses, created conflict among Republicans and has yet to win President Donald Trump’s endorsement.
So even as stock traders welcomed Mnuchin’s pledge to enact comprehensive tax legislation before the end of this year, sceptics questioned the prospect.
“Clearly they’re saying what they’d like to believe is true,” said Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, a progressive policy group in Washington.
“We now know that we must heavily discount their assertions,” said Bernstein, who served as former Vice President Joe Biden’s chief economic adviser.
“The lack of agreement on the desired direction for tax reform casts doubt on whether it can be done this year,” said Alan Viard, a senior scholar at the conservative American Enterprise Institute.
“But I suppose end of year is still possible, if they can coalesce around something reasonably soon.” During a conference last Thursday sponsored by the Institute of International Finance, both Mnuchin and Gary Cohn, President Donald Trump’s top economic adviser, raised expectations for significant tax legislation before the end of 2017.
“Just to be clear: We hope this won’t take til the end of the year,” Mnuchin said. Of the administration’s plan, he said:
“We’re pretty close to being able to bring forward what is going to be major tax reform.”
In February, during a meeting at the White House with US airline executives, Trump said: “We’re going to be announcing something I would say over the next two or three weeks that will be phenomenal in terms of tax.” That was 10 weeks ago.
Because Republicans in Washington generally agree that tax rates for businesses and individuals should be cut, many saw Trump’s election – which gave their party control of Congress and the White House – as a sign that their goals were in reach. They still may be. “You don’t need a detailed plan in April to have legislation passed by the end of the year,” said Martin Feldstein, an economics professor at Harvard University. — WP-Bloomberg