There are many ways to raise revenue for tax reform other than the border-adjustable tax, Treasury Secretary Steven Mnuchin said May 1, identifying it as a sticking point in discussions between the House GOP leaders who support it and an unpersuaded White House.
Mnuchin also said tax reform would likely exclude infrastructure spending. President Trump said in an interview with Bloomberg the same day that he would be willing to consider a gas tax increase to fund infrastructure, though whether he was drawing a connection to tax reform is unclear.
Trump also told Bloomberg that he would like tax cuts to be permanent. Mnuchin said April 26 that while a permanent tax cut would be preferable, if it is possible to do only a 10-year cut under the Senate reconciliation rules that Republicans will likely use to circumvent Democratic opposition, “we’ll do that.”
The president wants tax reform to close the so-called carried interest loophole, White House Chief of Staff Reince Priebus told ABC’s This Week April 30, reviving a stance Trump campaigned on. However, the former Republican National Committee chair seemed to hedge May 1, telling CBS This Morning that “I think you're probably going to see” carried interest closed in tax reform. “If it was up to the president, it'd be gone,” Priebus said.
Mnuchin cast the border-adjustable tax as unessential to tax reform during an on-stage interview with Fox Business Network at the Milken Institute Global Conference in Los Angeles.
As he helped unveil it April 26, Mnuchin said the House and Senate were in 100 percent agreement with the Trump administration’s tax reform outline. However, in the conference interview Mnuchin gave a more measured assessment of the outline’s differences with House Republicans’ “Better Way” tax reform blueprint, echoing comments by House Speaker Paul D. Ryan, R-Wis.
“I’d say 80 percent of the details, we’re in agreement,” Mnuchin said of the blueprint after stating that he has been meeting weekly with Ryan, House Ways and Means Committee Chair Kevin Brady, R-Texas, and Senate leaders. “There’s another 20 percent that we need to work through. One of the issues we’ve talked to the House about is their border-adjusted tax, which we’ve said we don’t think works in its current form.”
Though he did not characterize the concept itself as unworkable, Mnuchin pushed back at the suggestion that the White House would consider a border-adjustable tax, which the administration’s outline did not mention, to offset the revenue lost from deep tax cuts. “No, but there’ll be other things,” he said. “There’s plenty of other ways to raise that revenue.”
Mnuchin did not dispute widely repeated estimates that a 20 percent border-adjustable tax, as in the House blueprint, would net about $1 trillion of revenue. The provision would have a huge economic impact, he said, collecting $5 trillion more on imports and $4 trillion less on exports.
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