Treasury Secretary Steven Mnuchin said the removal of the tax deduction for state and local taxes remains an important part of the administration’s reform plan.
“We can’t have the federal government continue to subsidize the states,” Mnuchin told CNBC’s “Squawk Box” in a live interview. “That’s a major loophole that we’re trying to close in simplifying taxes.”
He spoke Thursday as the administration is trying to usher its tax reform plan through Congress.
The main tenets of the proposal are a sharp reduction in corporate taxes, as well as a reduction in the number of brackets and a break for middle-income filers. Opponents say benefits will fall too much for the wealthiest, however, and even some congressional Republicans object that the plan will blow up the budget deficit.
While providing upwards of $1 trillion in tax relief, the White House plan seeks to pay for it through economic growth and the elimination of certain deductions.
Among the most controversial so far has been the one for state and local taxes, often referred to as the SALT deduction. High-tax states like New York, New Jersey and Connecticut would get especially hard. Reports have indicated that President Donald Trump is unhappy with removing the SALT deductions as they would penalize middle-class earners.
In addition to tax reform, Mnuchin has been reported to be pushing President Donald Trump to name Federal Reserve Governor Jerome “Jay” Powell as the next central bank chair. Powell and former Fed Governor Kevin Warsh are believed to be the front-runners to replace Janet Yellen when her term expires in February.
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