CCH Tax Day Report
Treasury Secretary Steven Mnuchin told the Senate Finance Committee (SFC) on May 25 that the White House is not considering changes to the Child Tax Credit, the Earned Income Credit (EITC), and the charitable giving deduction, but declined to give details about the administration’s plans for other individual credits and deductions. “We are developing the overall plan so we’re looking at many, many different ways of broadening the base,” Mnuchin testified at an SFC hearing on President Trump’s fiscal year (FY) 2018 budget proposals (TAXDAY, 2017/05/24, W.1).
Sen. Bob Casey, D-Pa., asked Mnuchin which individual tax credits and deductions the White House would keep in its tax reform plan. Mnuchin said that the Child Tax Credit and the EITC are two incentives the White House would retain. When asked if the White House would keep the student loan interest deduction, the higher education tuition deduction and other incentives, Mnuchin declined to make a prediction, and said that the administration continues to work on the details of tax reform.
Mnuchin was also asked about the charitable giving deduction. He said the administration “supports the need for charitable giving; that’s why we want to leave that deduction in the tax code.”
President Trump also has proposed to double the standard deduction, Mnuchin told lawmakers. “By increasing the standard deduction, 95 percent of taxpayers will be able to file their taxes on a large post card,” Mnuchin said.
For pass-throughs, the president has proposed a 15-percent tax rate, according to Mnuchin. “We are committed to make sure that pass-throughs, small and medium-size businesses, have the benefit of a reduced rate and rich people will not use this as a loophole,” he said. SFC ranking member Ron Wyden, D-Ore., told Mnuchin that “tax cheats thrive in the absence of clear principles.”
Sen. Charles E. Grassley, R-Iowa, asked Mnuchin about the White House’s views on depreciation. “We do not support slowing depreciation,” Mnuchin said, adding, “We are looking at a variety of ways to increase depreciation.”
When asked about changing or eliminating the last-in, first out (LIFO) method of accounting, Mnuchin noted that “it’s not something we are considering at the moment.” He gave the same answer when asked if the White House is considering changes to the New Markets Tax Credit (NMTC).
“We are very focused on technology at the IRS,” Mnuchin said. He added that he is comfortable with the overall spending level at the Service. Sen. Johnny Isakson, R-Ga., asked Mnuchin to look into making Free File a permanent program.
SFC Chair Orrin G. Hatch, R-Utah, noted that he has been advocating tax reform for more than six years. “There is a growing understanding that our tax system does not work,” Hatch said. “My strong preference is for tax reform to be bipartisan,” he added.
Wyden said the “only way to pass lasting, job-creating tax reform is for it to be bipartisan,” Wyden criticized the White House for “dusting off the old, disproven idea that tax cuts pay for themselves. There’s not a reputable economist out there who will tell you that.”
By Jessica Jeane and George L. Yaksick, Jr., Wolters Kluwer News Staff
SFC Press Release: Hatch Statement at Finance Hearing on Administration’s Treasury Budget Request & Tax Reform Policy Options
SFC Press Release: Wyden Statement at Finance Committee Hearing on the Trump Tax Plan and Fiscal Year 2018 Budget
Treasury Department News Release, TDNR SM-0096