- Treasury Secretary Steven Mnuchin testified in front of the House Ways and Means Committee on Thursday.
- Mnuchin was asked about various aspects of the tax reform bill crafted by President Donald Trump and Republicans.
- Part of the bill, named the Tax Cuts and Jobs Act, placed a cap on the ability for taxpayers to deduct their state and local taxes from their federal tax burden.
- Mnuchin said that due to the SALT deduction cap, his own tax rate actually increased.
While data shows that most Americans got a tax cut in the wake of the tax reform bill supported by President Donald Trump and the GOP, some Americans came out with a higher burden including, evidently, the Treasury Secretary.
During a hearing with the House Ways and Means Committee on Thursday, Mnuchin was asked about the GOP tax law's cap on the ability to deduct state and local taxes, known as the SALT deduction .
Prior to the law, named the Tax Cuts and Jobs Act (TCJA), people could deduct all of the money they paid in state and local taxes from their federal tax bill. But after the TCJA, the amount that can be deducted was capped at $10,000 a year.
For areas with high state and local taxes such as New York, New Jersey, and California the cap has caused quite a bit of consternation and many state legislatures have attempted to craft workarounds for their residents.
According to Mnuchin, the cap on SALT deduction ended up causing his own tax rate to increase.
"I can tell you, I personally pay taxes in New York and California and my tax rate did go up because I no longer have the SALT deduction," Mnuchin said.
While the rate that Mnuchin faced increased, it's unclear based on the wording whether Mnuchin's total tax burden actually went up. The Treasury Secretary could have taken more deductions or a drop in taxable income could have pushed down his overall burden.
Mnuchin's potential tax bill increase makes sense since he is a multimillionaire and has residences in New York and California. According to an analysis by the conservative-leaning Tax Foundation , citing Internal Revenue Service data, 77% of the SALT deduction's benefit went to people making over $100,000 in 2016.
Additionally the nonpartisan Tax Policy Center noted that if the SALT deduction cap were repealed, 56% of the benefit would go to the top 1% of income earners in the US. Mnuchin, who made just over $41 million in 2017 , would definitely fall in that 1%.
Mnuchin is also squeezed by the fact that two of his residences are in New York and California, which by the Tax Foundation's calculations were the first- and fourth-largest beneficiaries of the SALT deduction before the cap.
So a rich man from two states with high state and local taxes paying more in taxes should come as no surprise.
But Mnuchin is one of the few Americans that are likely to see their taxes increase this year. According to data from the Tax Policy Center , 80% of tax filers should see their overall tax burden decrease by $100 or more for 2018 while just 5% will see an increase of $100 or more. The remaining 15% of filers should see a change of less than $100 in either direction.
- A sleep expert explains what happens to your body and brain if you don't get enough sleep
- 13 apps for your iPhone that are better than the ones Apple made
- Trump once promised to eliminate the national debt in 8 years but his new budget shows the president is going in the opposite direction