Treasury Secretary Steve Mnuchin testified today before the House Ways and Means Committee, fielding a variety of questions about the president's FY 2021 budget proposal, the Tax Cuts and Jobs Act (TCJA), and a potential tax cut under development by the White House. He also defended the administration's efforts to contain the coronavirus. 

Chairman Richard Neal (D-MA) opened the hearing by noting reports that the administration is considering another potential rate reduction for corporations. Dismissing the idea, the Chairman said a better option would be to pursue an infrastructure bill to stimulate the economy.

Mnuchin said the president is "very interested in a one or two trillion dollar infrastructure program, and we look forward to working with this committee and the Senate to figure out how we can get that done." He also noted, "If there's a need to stimulate the economy as a result of the coronavirus, I am sure that infrastructure is a priority for the president." 

The Treasury Secretary said that there is "absolute bipartisan support" for opposing unilateral digital services taxes. "We have been working around the clock on these issues at the OECD to see if we can come up with a proposal that is acceptable to us, to Congress and to U.S. businesses." He noted that the president "has been personally involved in conversations with [French] President Macron and others to delay implementation and collection of these taxes."

On the OECD's efforts to reach a consensus on digital taxes, Mnuchin explained: "There's two pillars to this process. One is Pillar Two, which is a global minimum tax, very similar to our GILTI, and that's something we do support. For Pillar One, we are working on a proposal of a safe harbor that creates certainty for U.S. companies."

Mnuchin praised the Federal Reserve for cutting interest rates by half a percentage point in response to the coronavirus. "They did the right thing getting ahead of this," he said.

The Treasury Secretary pledged to work with the Senate Finance Committee on a bipartisan solution to the solvency crisis facing multiemployer plans. He also acknowledged concerns about rising student debt, telling Rep. Linda Sanchez (D-CA) that debt-financed college tuition "needs to be restructured, and we look forward to working with this committee and Congress on student lending."

Rep. Kenny Marchant (R-TX) noted a recent letter that he and other GOP taxwriters sent to the Treasury Department urging a reevaluation of the Foreign Investment in Real Property Tax Act (FIRPTA) and related guidance issued by the IRS in 2007 (Notice 2007-55). Rep. Marchant criticized the guidance for extending FIRPTA to previously untaxed transactions involving domestically controlled Real Estate Investment Trusts (REITS). Mnuchin said the letter prompted a briefing at Treasury and that he shares the concerns raised about FIRPTA. "[I]t makes no sense that we discriminate against foreign investors," he said. "It's on the top of my list," he added.

In response to an inquiry by Rep. Suzan DelBene (D-WA) on the coronavirus, Mnuchin said the Treasury Department would consider policy incentives aimed at small and medium businesses, if warranted, to ease the economic impact of the contagion.

Mnuchin said he shares concerns raised by Rep. Judy Chu (D-CA) about the IRS' failure to focus audits on upper-income taxpayers. "I have specifically directed the IRS commissioner to come up with a plan to increase the amount of funding so that we can audit more high-income earners," he noted.

On the TCJA, Mnuchin repeatedly expressed support for correcting a drafting error in the law that restricts expensing for qualified improvement property by some restaurants and retailers. Chairman Neal indicated that the needed correction hinges on other tax policy priorities that Democrats want to pursue (i.e., expanding the earned income tax credit and the child tax credit).

The Ways and Means Committee will hold another hearing tomorrow that will focus on tax issues affecting Native American tribes.

The prepared statement of Sec. Mnuchin at today's hearing is posted here.

Chairman Neal's opening statement is posted here.

The opening statement of Rep. Devin Nunes (R-CA), who acted as Ranking Member in the absence of Rep. Kevin Brady (R-TX), is posted here.

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