Monday 22 October 2018

Republicans in last-ditch push to pass Trump's $1.4tn tax bill

US President Donald Trump. Photo: PA
US President Donald Trump. Photo: PA

Alan Fram

Republicans used a burst of eleventh-hour horse-trading yesterday to edge a $1.4 trillion (€1.18tn) tax bill to the brink of Senate passage, 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 local property taxes.

Party leaders hoped for Senate approval late last night 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 $1tn, 10-year flood of deeper budget deficits couldn't 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, the only announced Republican opponent, who battled to keep the measure from worsening the government's accumulated $20tn in IOUs.

The Republican-led House approved a similar bill last 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.

Bill

Approval would launch talks, likely next week, between the Senate and the House of Representatives on crafting a single bill.

That would then go to the White House, where President Donald Trump was expected to sign it into law before the end of the year. The House, which has already approved its own bill, was expected largely to defer to the Senate measure.

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. 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 35pc to 20pc 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 $75,000 (€63.000) would on average face higher, not lower, taxes.

Families

"Every time the choice is between corporations and families, the Republicans choose corporations," said Senate Minority Leader Chuck Schumer.

The bill hit rough waters on Thursday after the Joint Taxation panel concluded it would worsen federal shortfalls by $1tn over a decade, even when factoring in economic growth that lower taxes would stimulate.

Under the changes leaders agreed to, millions of companies whose owners pay individual, not corporate, taxes on their profits would be allowed deductions of 23pc, up from 17.4pc.

People would be allowed to deduct up to $10,000 in property taxes.

The changes added more than $300bn to the tax bill's costs. To pay for that, leaders agreed to reduce the number of high-earners who must pay the alternative minimum tax, rather than completely erasing it.

They'd also increase a one-time tax on profits US-based corporations are holding overseas and require firms to keep paying the business version of the alternative minimum tax.

Overall, the Senate bill would drop the highest personal income tax rate from 39.6pc to 38.5pc.

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 $12,000 for individuals and $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.

Irish Independent

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