Politics

Trump Team Calls For 'Largest Tax Change Since Reagan'

| by Nik Bonopartis

When it comes to fiscal policy, the incoming administration's "No. 1 priority is tax reform," according to the man President-elect Donald Trump has tapped for secretary of the treasury.

Steven Mnuchin is a 53-year-old former hedge fund manager and executive at Goldman Sachs who said he subscribes to the classic conservative model of stimulating economic growth by lowering taxes.

Promising tax reform that will result in "the largest tax change since Reagan," Mnuchin told CNBC that Trump and his team want to cut taxes for the middle class, reduce corporate taxes as a way to get companies to return stateside and simplify the tax code.

Simplification of the tax code is an issue Trump returned to often on the campaign trail, claiming intimate familiarity with the tax code as a businessman and arguing that it's too complex for regular citizens to understand and navigate.

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"Taxes are way too complicated and people spend way too much time worrying about ways to get them lower," Mnuchin said.

Responding to accusations the Trump administration will simply cut taxes for the wealthy, Mnuchin said any tax reductions for high-income earners will be offset by changes in the tax code limiting the number -- and type -- of deductions people above a certain income threshold can claim.

"There will be a big tax cut for the middle class," Mnuchin said. "But any tax cuts we have for the upper class will be offset by [fewer] deductions that pay for it."

Unlike previous attempts at reforming the tax code, the Trump administration's plan will be "integrated across both commerce and treasury" and will be designed to take advantage of re-negotiated trade deals and ongoing efforts to bring outsourced jobs back to the U.S., the former banking executive said.

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A USA Today story that quoted a handful of analysts said observers are "cautiously optimistic" about Trump's approach to taxes, and his vow to increase GDP growth. But some experts, like Tax Analysts' attorney Robert Goulder, said the reduction in tax revenue will have to be paired with a reduction in spending.

That's an issue that has long been a pet peeve of fiscal conservatives, who point to things like government waste and questionable government spending.

"Where are the spending cuts? Where are the federal entitlement reforms?" Goulder asked. "Can we run up a larger deficit without having negative effects that outweigh the positives of pro-growth tax plans?"

Sources:: USA Today, CNBC / Photo credit: Milad Mosapoor/Wikimedia Commons

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