Mnuchin Casts Doubt On Capital Gains Tax Cut In Virus Bill

By Dylan Moroses
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Law360 (June 10, 2020, 3:24 PM EDT) -- Relaxing the tax treatment of capital gains to encourage investments during the novel coronavirus pandemic wouldn't be the best relief the government could provide to employers and workers, Treasury Secretary Steven Mnuchin told a Senate panel Wednesday.

Treasury Secretary Steven Mnuchin told a Senate panel Wednesday that any new coronavirus relief package should focus on getting employees back to work. (AP)

Acknowledging recent discussions on Capitol Hill regarding changes to the tax treatment of capital gains, Mnuchin said the Federal Reserve has already taken steps to "unlock the capital markets and provide a lot of liquidity for investment." The administration of President Donald Trump is "much more targeted at getting people back to work," Mnuchin said during a Senate Small Business Committee hearing.

House Ways and Means Chairman Richard Neal, D-Mass., and other Democrats have pushed back on the idea of a capital gains tax cut in the next legislation to address the economic and health crises brought by the pandemic. However, Neal has encouraged further study of how capital gain revenues have been affected by the downturn.

Mnuchin said that negotiating the next virus relief measure could take longer in light of recent jobs numbers that indicated some gains in employment, but that the next bill should focus on providing incentives to encourage employees to return to work.

"We're going to need money for business to encourage businesses to rehire people, especially in areas that have been most impacted," Mnuchin said.

Lawmakers and the administration will "seriously consider" a second round of stimulus payments to Americans, Mnuchin said, but he stopped short of endorsing the idea.

Mnuchin also said that the increase in federal unemployment insurance would need to be revised but didn't provide details about the level at which it should be set or what other changes would be needed. The way that federal unemployment insurance is set now, some people are receiving more money than they would if they were working, Mnuchin said.

In March, Trump signed into law the last major coronavirus relief bill: H.R. 748, or the Coronavirus Aid, Relief and Economic Security Act . Since then, Congress has passed legislation to boost funding for the paycheck protection loan program included in the CARES Act.

The House has approved the Health and Economic Recovery Omnibus Emergency Solutions Act, the Democrats' $3 trillion legislation that would authorize another round of cash payments to provide further relief from the pandemic and create more tax incentives for workers and businesses.

That legislation passed the chamber with nearly all House Republicans opposing it and it remains pending in the Senate, where GOP lawmakers have been reticent to consider another relief bill.

Republicans have argued that additional virus relief legislation should include new business tax incentives such as further payroll tax cuts and make permanent temporary breaks such as the immediate business expensing provision passed in the 2017 federal tax overhaul. The next measure should also include a shield against COVID-19 liability lawsuits for businesses, according to Republicans. COVID-19 is the respiratory ailment caused by the novel coronavirus.

A representative of the Senate Small Business Committee didn't immediately respond to a request for comment.

--Additional reporting by Stephen Cooper, Andrew Kragie and Alan K. Ota. Editing by Neil Cohen.

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