Financial Times

Trump budget chief accuses IMF of wanting flagship US tax reforms to fail

by Sam Fleming, Chris Giles and Demetri Sevastopulo, FT

October 12, 2017 | 4:42 pm
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President Donald Trump’s budget director has attacked the IMF and other critics of the administration’s tax cut plan, accusing them of wanting the reforms to fail.


Mick Mulvaney, head of the Office of Management and Budget, told the Financial Times that sceptics of the plan were “heavily invested in it not working out”.


Champions of the White House tax reforms, the centrepiece of the administration’s legislative agenda, say that slashing corporate and individual rates will boost growth and, hence, government receipts. But the IMF is urging countries with significant deficits to raise, not lower, taxes.


“There are folks that are invested in seeing this fail because if it works then what is their argument for re- regulating?” Mr Mulvaney said. “By the same token, if lowering tax does actually lead to growth, what is their argument going to be for raising taxes in the future?”


Washington’s allies have become increasingly concerned that the US, the largest IMF shareholder, is working to undermine multinational institutions.


Mr Trump has levelled fierce criticism at the global trading system. He has called the UN a bloated bureaucracy and suggested during the presidential campaign that Nato was obsolete.


Mr Mulvaney’s remarks are not the first time a senior Trump aide has taken on the IMF. In April, Wilbur Ross, the US commerce secretary, called warnings of rising US protectionism by Christine Lagarde, the IMF chief “rubbish”.


Vitor Gaspar, the fund’s head of fiscal affairs, responded to Mr Mulvaney’s comments, saying: “The idea that one would produce additional revenue by lowering tax rates is something that, being a conceptual possibility, is rarely documented empirically.”


Asked about the IMF’s scepticism, Mr Mulvaney, who was known as a deficit hawk while a member of Congress, said: “Yes, they are heavily invested in it not working out.”


Last month, Steven Mnuchin, US Treasury secretary, said the tax plan would cut the deficit by $1tn because it would generate more growth and revenue – a notion dismissed by many economists. The Trump administration has also been derided for basing its budget and tax assumptions on heady growth projections, pointing to an expansion of 3 per cent or more.


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by Sam Fleming, Chris Giles and Demetri Sevastopulo, FT

October 12, 2017 | 4:42 pm
  |     |     |   Start Conversation

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