Senate OKs US tax bill, puts GOP on brink of win

Bloomberg

Senate Republicans passed the most extensive rewrite of the US tax code in more than 30 years, a bill that delivers a deep, permanent tax cut for corporations and shorter-term relief for individuals.
The chamber’s 51-48 party line vote on Wednesday in Washington brought President Donald Trump to the brink of his first major legislative victory. The bill—which has scored poorly in public opinion polls— promises to become one of the biggest issues in the 2018 elections that will determine whether the GOP retains its majorities
in Congress.
Trump marked the occasion on Twitter, calling the legislation “the biggest in history Tax Cut and Reform Bill”—though experts have said that’s not the case. Before reaching his desk, the bill was expected to return to the House for one final vote on Wednesday. The White House was planning to hold a “bill passage event” with House and Senate members at 3 pm. But the gathering won’t be a signing event, which will happen at a “later date,” White House Press Secretary Sarah Huckabee Sanders said.
“Tonight’s vote in the Senate marks a pivotal moment in American history,” said Senator Orrin Hatch, the Utah Republican who chairs the tax-writing Finance Committee. “For the first time in more than three decades, we cleared a comprehensive overhaul of the nation’s tax code and delivered on our promise of creating and advancing pro-growth policies.”
Vice President Mike Pence presided over the Senate vote, which was interrupted repeatedly by protesters, some of whom chanted, “Kill the bill, don’t kill us!”
The bill slashes the corporate tax rate to 21 percent from 35 percent, enhancing the US position against other industrialised economies, which have an average corporate rate of 22.5 percent. It offers an array of temporary tax breaks for other types of businesses and for individuals—including rate cuts that will tend to favour the highest earners. Most middle-class workers will also get short-term relief, but independent analyses show the amounts aren’t large.

Back to House
The average tax cut for the bottom 80 percent of earners would be about $675 in 2018, according to an analysis by the Urban Brookings Tax Policy Center. The top 1 percent of earners would get an average cut of about $50,000 that year, and the top 0.1 percent would get an average of $190,000, according to the group’s analysis.
Senate Majority Leader Mitch McConnell predicted that the changes would gain favour with voters who have so far been cool to the legislation in polls.
The changes would reduce federal revenue by almost $1.5 trillion over the coming decade—before accounting for any economic growth that might result, according to Congress’s Joint Committee on Taxation, which analyses tax legislation. Earlier versions were forecast to increase deficits by roughly $1 trillion even after any growth effects.
The bill now heads back to the House, which approved it earlier on a 227-203 vote. The do-over became necessary after Senate Democrats forced their GOP counterparts to make three minor changes to the bill—including dropping a provision that had named it the “Tax Cuts and Jobs Act.”
That move was little more than a procedural hiccup; it also forced the removal of a provision that would have allowed parents to use 529 educational savings accounts to cover expenses of home-schooling their children. Another required change was related to an exemption from a new excise tax on private universities’ endowments above a certain threshold.
The House will pass the bill again with ease, said Representative Kevin Brady, who chairs the tax-writing Ways and Means committee. “The only thing better than voting on tax cuts once is voting on tax cuts twice,” Brady said.
The Senate’s vote—which came after a six-week sprint marked by marathon meetings, late-night votes and hasty rewrites of
key provisions—represented a triumph for McConnell, who in
September had failed to secure another major GOP priority: repealing Obamacare.
In one of the tax measure’s most controversial provisions, GOP senators attached language that repeals a major piece of the health-care legislation: the individual mandate that requires people to have insurance coverage.
GOP leaders say the Obamacare mandate’s penalty—$695 for individuals—falls disproportionately on lower- and middle-income people. Repealing it is estimated to generate $300 billion over 10 years, helping to keep the tax bill from creating even larger deficits.