NRF welcomes tax reform legislation and calls on Congress to act quickly. Read more.
Treasury Secretary Steven Mnuchin brought the Trump administration’s pitch for tax reform to retailers this week, seeking to energize grassroots support from an industry that pays the nation’s highest effective tax rate and has been demanding reform for years.
“There’s no question in my mind that over the last eight years this has been a great environment for rich people but for the average worker their wages have gone nowhere,” Mnuchin said. “This is as much about creating tax cuts that will spur investment, but this is also about jobs and wages.”
“This is all about creating economic growth,” he said.
Mnuchin spoke at the Ohio Council of Retail Merchants’ annual luncheon in Columbus, answering questions from NRF President and CEO Matthew Shay, who served as moderator (above left). Shay was among trade association CEOs who met with President Trump earlier this month at the White House, where he told the president retailers strongly support tax reform as a way to create jobs and boost the nation’s economy.
NRF has argued that lowering business taxes would free up resources so companies in all sectors of the economy — not just retail — can create more jobs, and that cutting middle-class taxes would put more money into consumers’ pockets. Mnuchin appeared to agree that the combination would lead to an increase in consumer spending that would create a ripple effect throughout the economy.
“I think this will help the consumer,” Mnuchin said. “This will be good for retail. We are looking forward to this impacting growth.”
“If we let our companies compete fairly on a level playing field, they will outperform other countries around the world.”Steven Mnuchin
Despite some differences, Mnuchin said the House and Senate “fundamentally have the same plan” for tax reform and that he is optimistic the House will approve its bill this week with the Senate to follow after Thanksgiving. He said the White House prefers that the cut in the corporate tax rate to 20 percent from the current 35 percent take effect immediately as proposed by the House rather than be delayed until 2019 as proposed by the Senate: “From our perspective, sooner is better.”
“We think 20 percent is the right rate,” Mnuchin said. “It’s a very competitive rate. If we let our companies compete fairly on a level playing field, they will outperform other countries around the world.”
Retailers benefit from few of the tax deductions and credits that lower tax bills for other industries. NRF has called for tax reform that would broaden the base by eliminating most tax breaks, and for the revenue that would be saved to be used to lower rates for all businesses, both large and small. A recent NRF analysis found that reducing the corporate tax rate to 20 percent could result in the creation of between 500,000 and 1.5 million new jobs throughout the economy.