Trump Administration Tax Plan
A principal in Ernst & Young, LLP, working in Washington, D.C., and a co-leader of EY’s Americas Tax Center and its National Tax Department, Michael Mundaca draws on past experience with the U.S. Treasury Department as assistant secretary for tax policy. Michael Mundaca’s work as co-leader involves coordination with professionals across the Americas in facilitating tax services.
As featured in a recent EY Americas Tax Center Global Tax Alert, one topic of current focus is a tax reform plan presented by the Trump Administration that proposes a tax rate of 15 percent for businesses. As part of the plan roll-out, Treasury Secretary Steven Mnuchin announced that the administration would negotiate with Congress on the rate for a one-time tax that would be assessed on US corporations’ unrepatriatied foreign earnings, as a transition to a territorial tax system for foreign business earnings.
Other proposed changes include a repeal of individual tax deductions other than those associated with charitable contributions and mortgage interest. The estate tax and alternative minimum tax would be repealed, as would be the net investment income tax, which went into law as part of the Affordable Care Act.
Michael Mundaca earned a JD from the Boalt Hall School of Law at the University of California at Berkeley. Michael Mundaca went on to become an assistant treasury secretary for tax policy in Washington, D.C. He currently serves as the co-leader of Ernst & Young’s Americas Tax Center and its National Tax Department.
With degrees in law from the University of California and the University of Miami as well as a masters in philosophy from the University of Chicago, Michael Mundaca went on to work for international law firm Sullivan and Cromwell and then for the U.S. Treasury Department. After several years of service in the Obama administration, Michael Mundaca returned to his previous employer Ernst & Young, this time as co-director of the National Tax Department – Americas Tax Center.
As co-leader of the National Tax Department at Ernst & Young in Washington, DC, Michael Mundaca builds on experience gained as assistant secretary for tax policy at the U.S. Treasury Department. On the Freakonomics blog in 2010, when Mr. Mundaca was the tax policy assistant secretary, as part of an article titled “Your Tax Questions, Asked and Answered,” he responded to a query as to whether Warren Buffett could pay “a lower tax rate than his secretary.”
Noting that he was not aware of the specific tax circumstances of Warren Buffett or his secretary, Mr. Mundaca posited that this was certainly possible under the (then current) tax law. Although wages may be subject to a 35 percent maximum marginal tax rate, long-term capital gains as well as dividends were at that time subject to a maximum 15 percent marginal tax rate.
That can lead to situations in which an individual with long-term capital gains could have paid 15 percent or less on that income; at the same time, an wage earner with significantly lower income might have paid taxes at a rate well in excess of 15 percent. Another factor in play was the exemption of investment income from payroll taxes, which can additionally decrease the tax burden on those with significant income from investments.