Earlier today, Secretary Steve Mnuchin testified before the Senate Budget Committee. While he created some news by telling Senator Tim Kaine that there would potentially be a good government shutdown, he also created a stir when he admitted that he’s walking back from the Mnuchin rule.
The Mnuchin rule came after Mnuchin used an interview on CNBC to say tax cuts would primarily serve the middle class (a sentiment he emphasized this morning as well) and that the rich wouldn’t an absolute tax cut.
“Any reductions we have in upper-income taxes will be offset by less deductions so that there will be no absolute tax cut for the upper class,” Mnuchin said during the interview.
Since Mnuchin had been walking back from those statements recently, Senator Ron Wyden decided to confront the Secretary about the rule. Highlighting how he seemed to be so proud of the rule a few months ago, he wanted to know if the Secretary stood by the CNBC interview.
“You made it a rule. I didn’t make it a rule,” the Secretary responded. Those comments were in response to the fact that it was Wyden who first dubbed the comments “the Mnuchin rule.” He then went on to say that it’s still the “objective” of the Trump administration to avoid giving the wealthy a tax cut, but wouldn’t commit to actually following through with the idea.
While Mnuchin walking back from his promise is newsworthy in itself, it also ties into other topics discussed during the hearing. Senator Bernie Sanders, for instance, pointed out that the Republicans tend to want to repeal the tax on large inherited estates.
While questioning the Secretary, Sanders pointed out that the inheritance tax only applied to the top .2% of families. In other words, these are people like the Waltons and the Koch brothers. Bernie even pointed out that it would potentially give the Trump family a tax break.
If the Republicans end up repealing the inheritance tax, it would essentially be a tax cut for the uber wealthy — a direct contradiction to the Mnuchin rule.
With all this in mind, Mnuchin kept insisting that his “objective is to deliver tax reform so we can get the economy moving again.” He also added that he wants to “simplify the tax code and make it easier for Americans to file their returns.”
The point of those statements was to make it sound like the Trump Administration was trying to focus on improving the economy for everyone — especially the middle class. The way it was phrased, however, it didn’t rule out actually giving the wealthy a tax cut. Those who believe in trickle down economics, after all, believe tax cuts for the wealthy could “get the economy moving again.”