No tax reforms before August: US Treasury secretary

Tammy Harvey
April 20, 2017

Steven Mnuchin said the target to get tax reforms through Congress and on President Donald Trump's desk before August was "highly aggressive to not realistic at this point".

His remarks came as the administration of the Republican president was busy dealing with efforts to "repeal and replace" former President Barack Obama's signature healthcare plan, known as Obamacare, following a failure to do so in March.

"It started as [an] aggressive timeline", he said, according to the paper. He says, "In an otherwise quiet session, the comments from the Treasury secretary may be giving the dollar a little bit of a leg to stand on".

Mnuchin maintained he still expected the tax system to be reformed in 2017.

Late last month, President Trump's flagship healthcare bill was killed off after failing to secure enough support from Republicans.

Shortly after taking office in February, Mnuchin said the administration wanted to pass major tax legislation by the time Congress left for its August recess.

The uptick is driven by expectations that the US will cut taxes and higher confidence among consumers and businesses. Stocks rallied hard following his comments that the Treasury Department is looking to raise funds to pay for the tax plan without implementing a border-adjustment tax - a proposal to place a 20 percent tax on all imports but not tax exports.

A top Trump administration official concedes in an interview published today that tax reform will be a heavy lift this year, even as other reports indicate that members of Congress are considering a package of tax cuts and other benefits that would not be balanced by changes that would solidify the government's revenue stream.

"The key for the market is still earnings, economic growth etc, and politics is merely a daily side show", said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago, Illinois. "When you calculate whether it is deficit-neutral or not, there are a bunch of different calculations and a bunch of models". Mnuchin also commented that there is a big difference between talk and action which dampened expectations that the Treasury would be ordered to take action to weaken the United States currency directly.

CNBC reported Mnuchin's comment did not surprise markets. 67 percent of respondents said that corporations were also not paying enough while 19 percent believed that they were contributing a fair amount.

Other reports by Ligue1talk

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