Mnuchin defends Treasury tax law implementation
Mnuchin defended his department’s regulations carrying out the 2017 tax code overhaul that added more than $100 billion in corporate tax benefits
Treasury Secretary Steven Mnuchin found himself parrying allegations that his department’s regulations carrying out the 2017 tax code overhaul added more than $100 billion in corporate tax benefits Wednesday at his first Capitol Hill appearance defending President Donald Trump's new budget request.
Mnuchin also took fire from Senate Finance Committee Democrats who said he favored a Republican request for documents related to Vice President Joe Biden's son Hunter — a central figure in the impeachment drama that wrapped up last week — while “stonewalling” their demands for Trump's tax returns.
Trump’s “agenda is working,” Mnuchin told panel members at the outset of the hearing on Trump's $4.8 trillion fiscal 2021 budget request.
“Tax cuts, regulatory reform and better trade deals are improving the lives of hardworking Americans,” he said, repeating a frequent Trump plaudit about the current near-record levels of unemployment for minorities, veterans, women and the entire working-age population.
Democrats, though, concentrated more on impacts of the 2017 tax law and other issues not directly related to the budget request.
Finance ranking member Ron Wyden, D-Ore., complained about a recent finding from the Congressional Budget Office that corporate income tax collections would be $110 billion lower over a decade than previously projected. That's largely a result of regulations regarding the 2017 law’s changes in international tax rules at the Treasury Department.
Wyden said that he and Sen. Sherrod Brown, D-Ohio, were introducing legislation to roll back the “shiny new corporate tax loopholes” Treasury added as it set rules required by the 2017 overhaul.
“It sure looks like corporate special interests are going to make off with brand new loopholes worth $100 billion in addition to their outlandish share from the original $2 trillion Trump tax law,” Wyden said.
Mnuchin and other top GOP officials have repeatedly said, and Mnuchin repeated Wednesday, that faster economic growth would make up for "static" revenue loss from the 2017 law, though that hasn't yet borne out. The administration's latest budget envisions some $478 billion in higher corporate tax receipts than the CBO does in its January forecast, which Mnuchin said wasn't unusual. “Our analysis has always been higher than CBO’s,” he said.
Committee Republicans were quick to come to Treasury’s defense. Senate Finance Chairman Charles E. Grassley, R-Iowa, disagreed that the lower CBO estimate should be attributed to agency rulemaking. Grassley blamed the decline on a lagging global economy, an overall reduction in corporate tax revenue estimates and international trade developments.
Sen. Rob Portman, R-Ohio, said it was Congress’ job to write laws and CBO’s job to score them. “Your job is to implement the law in accordance with congressional content and I think you’ve done your best to do that," he said.
Bidens, Liu nomination
Wyden also criticized the Treasury Department for turning over financial records pertaining to Hunter Biden. Wyden complained that Treasury handed over Biden's financial records in response to a November 2019 request from Grassley and Senate Homeland Security and Governmental Affairs Chairman Ron Johnson, R-Wis.
But Treasury is involved in a court fight over House Ways and Means Chairman Richard E. Neal’s April 2019 request for Trump’s tax returns. The request for Biden records were “out the door in a flash” while Neal’s request was met “with nothing but legal foot dragging,” Wyden said.
“That’s just not fair,” Mnuchin shot back. He referenced a letter to Wyden Tuesday that pointed out the records provided to Grassley and Johnson were part of a “SARS request,” referring to Suspicious Activity Reports collected by banks under the Bank Secrecy Act.
The Feb. 11 letter said these disclosures can be made when “a written congressional request that meets certain specifications.” Meanwhile, Treasury has rejected requests for Trump’s tax returns, arguing that Neal hasn’t expressed an adequate legislative need for the returns.
After the hearing, Mnuchin told reporters that Treasury has “released thousands of SARS to congressional inquiries.”
“People are confusing these issues; they’re completely different issues,” he added.
Brown asked Mnuchin when he learned Trump was withdrawing the nomination of former U.S. attorney Jessie Liu for a top Treasury post, and if he knew why the nomination was withdrawn Tuesday.
“I believe it was two days ago,” said Mnuchin, adding that it was against administration policy for him to comment since nominations are made and withdrawn at the president's discretion.
Brown pointed out that Liu had been involved in some of the prosecutions that arose out of Special Counsel Robert S Mueller III’s investigation.
“Absent any plausible explanation . . . it appears this is another stop on the president’s personal retribution tour,” said Brown.
Pensions, tax corrections
Mnuchin said he expects to work with committee members from both parties to consider legislation to head off the projected 2025 insolvency of the Pension Benefit Guaranty Corporation’s multiemployer pension fund, which serves as a backstop against default for plans covering some 10 million union workers.
“The president is interested in working out on a bipartisan basis the needs of these pension issues,” Mnuchin said.
Mnuchin also repeated his frequent assertion that his “No. 1” priority for correcting the 2017 tax law remains the so-called “retail glitch fix,” which would eliminate an unintentional requirement that retailers must expense certain property improvements over 39 years rather than the intended option for immediate expensing.