Thursday, May 18, 2017

Mnuchin Warns Some Partnerships and LLCs Won't Get Tax Break

Imagine my surprise. Not all pass-throughs are going to get the 15% tax rate, despite the fact that Treasury Secretary said they would when Mnuchin and Trump economic adviser Gary Cohn introduced Trump's tax plan in April.

This is how Mnuchin responded during a hearing before the Senate Banking Committee in response to a question from Senator Elizabeth Warren:
I assure you we are not going to allow all pass-throughs to get that rate, 
I reported in April:
 Treasury Secretary Steve Mnuchin said at Wednesday's briefing on Trump's tax reform proposal that pass-troughs would be taxed at the 15% corporate rate.

So a high net individual would try and push as much of his earned income into a pass through with the 15% tax rate versus a personal tax rate as high as 30% plus.

But a Treasury official I spoke to called Mnuchin's comment a "Trump tax fart."

Muchin and  Director of the National Economic Council Gary Cohn were ill prepared for the briefing they held on tax reform. It was in response to a Trump comment just a couple of days earlier that a tax reform plan was going to be announced. They rushed to put something together and they weren't fully prepared.

Mnuchin and Cohn kept the briefing as thin on details as possible becasue they didn't have any and didn't want to step on any land mines.

But Mnuchin did "fart" with his pass-through comment.

Bottom line: According to my man at T, the idea of a pass-through rate of 15% for all pass through entities is already gone with the wind.

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