Treasury Secretary Steven Mnuchin defended his agency against Democrats who have accused it of politicizing a critical process at the Internal Revenue Service.
“I think this is another ridiculous charge,” Mnuchin told reporters in the White House press room Thursday when asked for a response to the Democrats’ charges.
Mnuchin spoke shortly after Treasury and the IRS issued an update to the IRS formula that employers use to estimate employees’ tax bills. Revisions to the so-called withholding tables incorporate changes from the new tax law.
Congressional Democrats are concerned that in making those changes, the IRS may have caved to pressure from the administration to deliver immediate tax savings to workers’ paychecks while exposing taxpayers to higher tax bills in 2019.
The Treasury Department may want to “make good” on a promise to deliver a $4,000 tax cut for certain households, Sen. Ron Wyden of Oregon and Rep. Richard Neal of Massachusetts, both Democrats, said in a letter to acting IRS Commissioner David Kautter. Treasury would achieve that, the lawmakers surmised in the letter, by pushing the IRS to change its formula for withholdings.
“We have people who have worked very carefully on this. Our objective is not to have taxpayers over-withheld, so they owe money at the end of the year,” Mnuchin said Thursday during the news conference. “And we’re going to actively encourage and make sure that taxpayers understand how to go on to the calculator, once it’s up and running. We’ll work with payroll providers; we’ll work with companies, we’ll do education sessions, so that taxpayers are properly withheld.”
In the letter, Wyden and Neal said that withholding too little in taxes presents “a considerable problem and undue hardship.”
The lawmakers, however, didn’t provide direct evidence of administration meddling in withholding tables.
Instead, they are basing their unease — in part — on the fact that the agency’s acting commissioner wears two hats. In addition to overseeing the nation’s tax system, Kautter is the assistant secretary for tax policy at Treasury, a politically appointed position.
While being careful not to criticize anything Kautter has done, one Republican acknowledged the dual role is not ideal.
“Kautter is doing a great job in both roles, but we need a full-time time IRS commissioner at this critical time as the law is being implemented — a person who only has one job,” said a senior Republican aide.
The roles of Treasury and the IRS aren’t perfectly aligned all the time — nor should they be. The IRS is supposed to be solely focused on executing the law, while Treasury takes a broader view, which incorporates politics and policymaking.
In their letter, Wyden and Neal said the IRS lacks independent and nonpolitical leadership.
They are asking the Government Accountability Office to review the revised withholding tables and determine whether they protect millions of taxpayers from being surprised during the 2019 filing season.
Mnuchin said they do.
“We have reviewed this very carefully, and based upon last year’s withholding tables, approximately 76 percent of taxpayers were withheld so that they had refunds at the end of the year. We expect based upon the new tables there will be no material change in this number,” he said.
