Speaking at the Reagan Library in Simi Valley this week, U.S. Treasury Secretary Steven Mnuchin and presidential advisor Ivanka Trump evoked the 40th president’s tax cut in the early 1980s to drum up support for President Donald Trump’s current tax overhaul.
If passed, the changes would mark the first comprehensive U.S. tax reform since Reagan signed the Economic Recovery Tax Act of 1981, Ivanka Trump, who worked with her father to craft the sweeping legislation, said.
“My passion has been to provide relief for American families,” the first daughter told the audience at the library’s speaker series event Nov. 5.
“Special interests have crept in” to reverse many of the gains the middle class saw from Reagan’s tax cuts and create a complicated tax code, she said. The new tax plan simplifies rates while also helping middle-class families by expanding the child tax credit and increasing the ceiling on tax-free earnings, Trump said.
“We cannot afford to not support all Americans, especially hard-working Americans and their families.”
Mnuchin, who is traveling around the country to promote Trump’s tax plan, said the setting of his Ventura County visit was symbolically important.
“Like Reagan, we’ll lower rates for families and businesses, reducing the corporate rate further (from 34 percent) to 20 percent. We’re closing loopholes that benefit the privileged few. We’re making the tax code simple and fair again,” he said.
Mnuchin promised the tax cuts will “immediately put money back into the pockets of Americans.”
With a proposed doubling of the standard deduction, the first $24,000 earned by a household would be tax-free. But critics worry that the middle class would simultaneously lose some of its valuable state income tax and home mortgage interest deduction. They’re also miffed that the plan would eliminate the deductibility of student loan interest.
Effect on businesses
Reagan championed lower taxes on businesses as a way to spur economic growth, increase wages and employment, and generate more taxable income.
But the strategy of supply-side economics, which came to be known as Reaganomics, or tickle-down economics, produced mixed results. Although Reagan’s tax cuts helped end the recession in the ’80s, they also ballooned the national debt. Trump’s plan would add an estimated $1.5 trillion to the debt.
Mnuchin said the plan encourages large corporations to return to the United States the trillions of dollars they chose to park overseas to avoid taxes.
High taxes on businesses contribute to the country’s stagnant 2 percent annual growth rate, “which has come to be seen as the new normal,” Mnuchin said. Under Trump’s plan, the nation’s gross domestic product, the total output of the U.S. economy, would jump to 3 percent or higher, he said.
Attending the presentation on Sunday along with federal, state and area dignitaries were students from Pepperdine University in Malibu, Cal Lutheran University in Thousand Oaks and Royal High School in Simi Valley.
Their impressions were mixed.
“I think the tax plan will work,” said Jack Richards, 15, a 10th-grader in Royal High teacher Brian Dennert’s world history and geography class.
“I really want to thank the library for allowing us to attend as guests,” the student added.
Four years ago, Dennert and fellow RHS teacher John Downey launched a similar speaker series at Royal called the Brown Bag lunch, bringing local officials and dignitaries to the campus to speak to students during lunch break. The series earned the school a California Civic Learning Award from the California Department of Justice and the state Department of Education.
Jack said that by attending the Reagan Library event, he learned “more about the tax plan than you can find out by going on the internet. It was cool.”
But Sammy Edgar, 15, a fellow 10th-grader in Dennert’s class, thought Mnuchin’s speech was short on details. He was also disappointed that the treasury secretary didn’t read his written question about how the plan closes tax loopholes.
“I did a lot of reading up on the plan to make sure I knew what they would be talking about,” Sammy said. “He spent a lot of time talking about how they’ll cut the business tax from 34 percent to 20 percent, but he didn’t provide sufficient information for me on how giving rich people a tax cut and cutting taxes to businesses will create more jobs for the middle class.
“I want to know more about the way it will trickle down.”