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Secretary Mnuchin expects tax law to produce $1 trillion

Staff Writer | January 15, 2018
U.S. Treasury Secretary Steven Mnuchin says he expects a massive increase in tax revenues after Congress passed and President Trump signed the GOP tax reform last month.
Steven Mnuchin
America   Economic Club
In accordance with the Laffer curve, Secretary Mnuchin expects an expansion in the taxable base due to both an accelerated pace of hiring, and a projected rise in taxable corporate profits.

This will make the presumably costly tax reform pay for itself, the Treasury Secretary said.

Secretary Mnuchin made his comments at an event hosted by the Economic Club of Washington in D.C.

He said the expansion in tax base will produce an additional $1 trillion in revenues, while the costs of the tax reform are expected at $1.1 — $1.5 trln over the next 10 years.

This makes the GOP tax plan revenue neutral, easing the concerns of the fiscally-conservative Republican lawmakers.

The Treasury Department will also ask Congress for additional funding to ensure implementation of the reform – but a quicker expected economic growth might produce an additional boost to budget revenues.

Secretary Mnuchin said his colleagues’ economic model assumed U.S. GDP growth will average at 2.9 percent in the near-to-medium term to produce the additional $1 trln in revenues.

If economic growth overshoots this projection, budget revenues will be higher – and President Trump is confident his administration can spur the U.S. economy to a 4-5 percent annualised expansion.