International

Huge U.S. tax bill heads for passage as GOP senators fall in line

House Ways and Means Committee Chairman Kevin Brady, R-Texas, is pursued by reporters in the Capitol after signing the conference committee report to advance the GOP tax bill, in Washington on Friday.

House Ways and Means Committee Chairman Kevin Brady, R-Texas, is pursued by reporters in the Capitol after signing the conference committee report to advance the GOP tax bill, in Washington on Friday.   | Photo Credit: AP

Only on Friday did Republicans cement the needed support for the overhaul, securing endorsements from wavering senators.

After weeks of quarrels, qualms and then eleventh-hour horse-trading, Republicans revealed the details of their huge national tax rewrite late on Friday along with announcements of support that all but guarantee approval to give President Donald Trump the Christmas legislative triumph he’s been aching for.

The legislation would slash tax rates for big business and lower levies on the richest Americans in a massive $1.5 trillion bill that the GOP plans to muscle through Congress next week before its year-end break. Benefits for most other taxpayers would be smaller.

“This is happening. Tax reform under Republican control of Washington is happening,” House Speaker Paul Ryan of Wisconsin told rank-and-file members in a conference call. “Most critics out there didn’t think it could happen. ... And now we’re on the doorstep of something truly historic.”

According to the 1,097-page bill released late on Friday, today’s 35% rate on corporations would fall to 21%, the crown jewel of the measure for many Republicans. Mr. Trump and GOP leaders had set 20% as their goal, but added a point to free money for other tax cuts that won over wavering lawmakers in final talks.

 

The legislation represents the first major legislative achievement for the GOP after nearly a full year in control of Congress and the White House. It’s the widest-ranging reshaping of the tax code in three decades and is expected to add to the nation’s $20 trillion debt. The tax cuts are projected to add $1.46 trillion over a decade.

The bill would repeal an important part of President Barack Obama’s Affordable Care Act the requirement that all Americans have health insurance or face a penalty as the GOP looks to unravel a law it failed to repeal and replace this past summer.

Only on Friday did Republicans cement the needed support for the overhaul, securing endorsements from wavering senators.

Marco Rubio of Florida relented in his high-profile opposition after negotiators expanded the tax credit that parents can claim for their children. He said he would vote for the measure next week.

Mr. Rubio had been holding out for a bigger child credit for low-income families. After he got it, he tweeted that the change was “a solid step toward broader reforms which are both Pro-Growth and Pro-Worker.”

Sen. Bob Corker of Tennessee, the only Republican to vote against the Senate version earlier this month, made the surprise announcement that he would back the legislation. Mr. Corker, the chairman of the Senate Foreign Relations Committee, has repeatedly warned that the nation’s growing debt is the most serious threat to national security.

“I realise this is a bet on our country’s enterprising spirit, and that is a bet I am willing to make,” Mr. Corker said.

The White House said Mr. Trump “looks forward to fulfilling the promise he made to the American people to give them a tax cut by the end of the year.”

The bill embodies a longstanding Republican philosophy that a substantial tax break for businesses will trigger economic growth and job creation for Americans in a trickle-down economy.

Sceptical Democrats are likely to oppose the legislation unanimously.

“Under this bill, the working class, middle class and upper middle class get skewered while the rich and wealthy corporations make out like bandits,” said Senate Minority Leader Chuck Schumer of New York. “It is just the opposite of what America needs, and Republicans will rue the day they pass this.”

The bill would drop today’s 39.6% top rate on individuals to 37%. The standard deduction used by around two-thirds of households would be nearly doubled, to $24,000 for married couples.

The $1,000-per-child tax deduction would grow to $2,000, with up to $1,400 available in IRS refunds for families who owe little or no taxes. Parents would have to provide children’s Social Security numbers to receive the child tax credit, a measure intended to deny the credit to people who are in the U.S. illegally.

Those who itemise would lose some deductions. The deduction that millions use in connection with state and local income, property and sales taxes would be capped at $10,000. That’s especially important to residents of high-tax states such as New York, New Jersey and California. Deductions for medical expenses that lawmakers once considered eliminating would be retained.

The bill would allow homeowners to deduct interest only on the first $750,000 of a new mortgage, down from the current limit of $1 million.

People who inherit fortunes would get a big break. The bill would double the exemption, meaning the estate tax would apply only to the portion of an estate over $22 million for married couples.

Members of a House-Senate conference committee signed the final version of the legislation on Friday, sending it to the two chambers for final passage next week. They have been working to blend the different versions passed by the two houses.

Republicans hold a slim 52-48 majority in the Senate, including two ailing senators who have missed votes this past week.

John McCain of Arizona, who is 81, is at a Washington-area military hospital being treated for the side effects of brain cancer treatment, and 80-year-old Thad Cochran of Mississippi had a non-melanoma lesion removed from his nose earlier this week. GOP leaders are hopeful they will be available next week.

A letter from the Editor


Dear reader,

We have been keeping you up-to-date with information on the developments in India and the world that have a bearing on our health and wellbeing, our lives and livelihoods, during these difficult times. To enable wide dissemination of news that is in public interest, we have increased the number of articles that can be read free, and extended free trial periods. However, we have a request for those who can afford to subscribe: please do. As we fight disinformation and misinformation, and keep apace with the happenings, we need to commit greater resources to news gathering operations. We promise to deliver quality journalism that stays away from vested interest and political propaganda.

Support Quality Journalism
Recommended for you
This article is closed for comments.
Please Email the Editor

Printable version | Jun 4, 2020 11:58:01 AM | https://www.thehindu.com/news/international/huge-tax-bill-heads-for-passage-as-gop-senators-fall-in-line/article21799899.ece

Next Story