- Treasury Secretary Mnuchin Says Pass-through Rate Cut Not for the Wealthy
- June 2, 2017
- Law Firm: Eversheds Sutherland (US) LLP - Washington Office
On May 18, Treasury Secretary Mnuchin attempted to assuage fears that the Trump tax plan will favor the wealthy. Trump’s tax reform outline proposes a 15% tax rate on business income, including income of individuals derived from pass-through entities, which is currently subject to a top marginal rate of 39.6%. While the outline includes few details, some commentators have expressed concern that the change will provide outsized benefits to the top 1% of households and the largest, most profitable pass-throughs.
Responding to a question by Senator Elizabeth Warren regarding the pass-through income rate change during testimony before the Senate Banking Committee, Secretary Mnuchin stated, “I assure you we are not going to allow all pass-throughs to get that rate.” He further indicated that procedures would be created to ensure that smaller businesses can benefit from the lower rate and to prevent wealthy individuals from abusing the system. The Trump Administration has not elaborated on the specific mechanisms that would be used to accomplish these objectives.