Mnuchin wants to keep deduction for businesses' interest expenses

Mnuchin wants to keep deduction for businesses' interest expenses
© Greg Nash

Treasury Secretary Steven Mnuchin said Wednesday that he wants to keep the deduction for businesses' interests costs — a position that's at odds with the tax blueprint House Republicans released last year.

"On the business tax, my preference is to maintain interest deductibility, which is important for small- and medium-sized businesses," he said during a House Ways and Means Committee hearing.  

Mnuchin added, however, that the administration is looking at the deduction "like everything else that's on the table."

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The House GOP blueprint proposes eliminating the deduction for businesses' net interest expenses because it would instead allow businesses to immediately deduct the full costs of their capital investments.

But some businesses and lawmakers have expressed concerns about eliminating the interest deduction, given that many businesses rely on debt to help manage their operations.

The White House and House Republicans have both proposed eliminating the state and local tax deduction. But lawmakers in high-tax states such as New York, New Jersey and California are concerned that eliminating that tax break would hurt their constituents.

"Fundamentally, we think that the federal government should get out of the business of subsidizing the states, but we are sensitive to the transition, and want to make sure that the middle income does have a tax cut," Mnuchin said.

When asked if he'd consider a temporary corporate tax cut, Mnuchin replied, "Permanent is better than temporary, and temporary is better than nothing." 

Mnuchin also said he'd be open to making the budget window longer than 10 years in an effort to facilitate tax cuts. If Congress wants to pass tax-reform legislation under the process known as "reconciliation" in order to avoid a Democratic filibuster, the bill can't increase the deficit outside of the budget window.