Senate Republicans on verge of approving sweeping US tax bill
Republicans used a burst of eleventh-hour horse-trading on Friday to edge to the brink of Senate passage of a US$1.4 trillion tax bill, as a party starved all year for a major legislative triumph took a giant step toward giving President Donald Trump one of his top priorities by Christmas.
“We have the votes,” Senate Majority Leader Mitch McConnell declared after leaders swayed holdout senators by agreeing to fatten tax breaks for millions of businesses and let people deduct much of their local property taxes.
Party leaders hoped for Senate approval later on Friday on a measure that focuses the bulk of its tax reductions on businesses and higher-earning individuals, gives more modest breaks to others and would be the boldest rewrite of the nation’s tax system since 1986.
Republicans touted the package as one that would benefit people of all incomes and ignite the economy. Even an official projection of a US$1 trillion, 10-year flood of deeper budget deficits could not dissuade nearly all Republican senators from rallying behind the bill.
“Obviously I’m kind of a dinosaur on the fiscal issues,” said Senator Bob Corker of Tennessee, who had been battling to keep the measure from worsening the government’s accumulated US$20 trillion in debt.
The Republican-led House approved a similar bill earlier this month in what has been a stunningly swift trip through Congress for legislation that impacts the breadth of American society and is hundreds of pages long.
After spending the year’s first nine months futilely trying to repeal President Barack Obama’s health care law, Republican leaders were determined to move the measure rapidly before opposition Democrats and lobbying groups could blow it up. The party views passage as crucial to retaining its House and Senate majorities in next year’s elections.
Democrats derided the bill as a Republican gift to its wealthy and business backers at the expense of lower-earning people. They contrasted the bill’s permanent reduction in corporate income tax rates from 35 per cent to 20 per cent to individual tax breaks that would end in 2026.
Congress’ non-partisan Joint Committee on Taxation has said the bill’s reductions for many families would be modest and said by 2027, families earning under US$75,000 would on average face higher, not lower, taxes.
“Every time the choice is between corporations and families, the Republicans choose corporations,” said Senate Minority Leader Chuck Schumer of New York.
The bill hit rough waters on Thursday after the Joint Taxation panel concluded it would worsen federal shortfalls by US$1 trillion over a decade, even when factoring in economic growth that lower taxes would stimulate.
Economists on the TAX CUTS and JOBS ACT:
“The enactment of a comprehensive overhaul - complete with a lower corporate tax rate - will IGNITE our ECONOMY with levels of GROWTH not SEEN IN GENERATIONS...” pic.twitter.com/2vCBDtLh3C
— Donald J. Trump (@realDonaldTrump) December 1, 2017
Trump administration officials and many Republicans have insisted the bill would pay for itself by stimulating the economy. But the sour projections stiffened resistance from some deficit-averse Republicans.
But after bargaining that stretched into Friday morning, McConnell and other leaders said victory was assured in a chamber they control 52-48. Facing unyielding Democratic opposition, Republicans could lose no more than two Republican Party senators and prevail with a tiebreaking vote from vice-president Mike Pence.
Overall, the Senate bill would drop the highest personal income tax rate from 39.6 per cent to 38.5 per cent. The estate tax levied on a few thousand of the nation’s largest inheritances would be narrowed to affect even fewer.
Deductions for state and local income taxes, moving expenses and other items would vanish, the standard deduction – used by most Americans – would nearly double to US$12,000 for individuals and US$24,000 for couples, and the per-child tax credit would grow.
The bill would abolish the “Obamacare” requirement that most people buy health coverage or face tax penalties. Industry experts say that would weaken the law by easing pressure on healthier people to buy coverage, and the non-partisan Congressional Budget Office has said the move would push premiums higher and leave 13 million additional people uninsured.