The Story:
Treasury Secretary Steven Mnuchin confirmed that a 20% corporate tax rate would be the ceiling for any future compromise on the tax bill between the Senate and the House, and that the Trump administration would not support legislation with anything higher than that.
Important Because:
The Treasury Secretary has been open about the Trump administration’s take on tax reform, unlike the clandestine approach on the Obamacare repeal.
Even with their majority in the Senate and the House, not to mention the presidency, the GOP has been unable to push any important piece of legislation through.
The transparency of their views on tax reform could help rally critical support for the bill.
This Happened:
Mr. Mnuchin has ruled out any increase in the corporate tax rate to above 20%, as confirmed at the Wall Street Journal CEO Council on Monday.
He’s clearly using a risk vs reward approach to selling the tax plan (emphasis ours):
The Risk:
“There is no question that the rally in the stock market has baked into it reasonably high expectations of us getting tax cuts and tax reform done. To the extent we get the tax deal done, the stock market will go up higher. But there’s no question in my mind that if we don’t get it done you’re going to see a reversal of a significant amount of these gains,” he told Politico in an interview.
The Reward:
Treasury Secretary Steven Mnuchin said Tuesday the Trump administration is considering backdating tax reform to the start of this year to boost the economy. Backdating “is still something we are considering and it would be a big boon for the economy,” he said at the Delivering Alpha conference presented by CNBC and Institutional Investor.
What is he trying to do?
In essence, Mr. Mnuchin appears to be trying to send a clear message to the leaders of his own party – and to the world – that if the bill passes it will be a big boon for the economy and, if not, it might tank the markets.
