President-elect Donald Trump recently announced the selection of former Goldman Sachs executive Steven Mnuchin to be the next Treasury Secretary. National Taxpayers Union is hopeful Mnuchin – a seasoned banking and finance executive with years of private sector industry experience – will fulfill the incoming Trump administration’s priority objective to advance comprehensive tax reform in the first 100 days in office. Early indications show Mnuchin very much understands what his focus should be: cutting taxes for all Americans and reviving America’s economy.
Mnuchin recently told CNBC, “by cutting corporate taxes, we’re going to create huge economic growth and we’ll have huge personal income.” And with an exceedingly high combined corporate tax rate of over 39 percent, cutting the corporate tax rate is long overdue. Today, the worldwide top average tax rate has actually dropped from 30 percent to 22.5 percent from 2003 to 2015 – over the past eight years under the Obama administration, America’s international competitiveness has fallen woefully behind. Fortunately Mnuchin, as a top tax advisor to candidate Trump, was influential with educating the President-elect to champion the goal of reducing America’s corporate tax rate to 15 percent when Trump spoke about tax reform on the campaign trail.
An important objective for Mnuchin will be to roll back – and avoid – the harmful regulatory action we saw under the Obama Treasury Department in recent years. A blatant example was Treasury’s actions this year to propose the so-called Section 385 regulations, which National Taxpayers Union criticized on numerous occasions. NTU filed our own comment to Treasury urging a withdrawal of the rules because of their detrimental effects on the broader business community, and their unintended consequences to penalize U.S. companies that had no intention of inverting. The Treasury Department withheld some of the most intrusive proposals in the final rules – particularly conditions to regulate domestic to foreign debt transactions – but this outcome only took place after aggressive and constant pressure by a diverse number of critics of the rules. Regulations that put barriers on everyday business practices should have no place in Mnuchin’s Treasury Department.
Mnuchin’s objective to carry out comprehensive tax reform requires a productive collaboration with both parties in Congress. And the important groundwork underway by the House Speaker Paul Ryan-Ways and Means Committee Chairman Kevin Brady blueprint should pave the way for Congress to move quickly on finalizing tax reform. Mnuchin must ensure, above all else, that specific industries are not singled out with new tax proposals. Any efforts to penalize economically robust sectors of the economy with punitive taxes will undermine the administration’s goal of achieving tax reform to generate economic growth and attract investment.