The U.S. Senate narrowly approved a tax overhaul on Saturday, moving Republicans and U.S. President Donald Trump a big step closer to their goal of slashing taxes for businesses and the rich while offering everyday Americans a mixed bag of changes.
In what would be the largest change to U.S. tax laws since the 1980s, Republicans want to add $1.4 trillion over 10 years to the $20 trillion national debt to finance changes that they say would further boost an already growing economy.
“We are one step closer to delivering MASSIVE tax cuts for working families across America,” Mr. Trump said in an early-morning tweet.
U.S. stock markets have rallied for months in the hope that Washington would provide significant tax cuts for corporations.
Celebrating their Senate victory, Republican leaders predicted the tax cuts would encourage U.S. companies to invest more and boost economic growth.
“We have an opportunity now to make America more competitive, to keep jobs from being shipped offshore and to provide substantial relief to the middle class,” said Mitch McConnell, the Republican leader in the Senate.
The Senate approved their bill in a 51-49 vote with Democrats complaining that last-minute amendments to win over sceptical Republicans were poorly drafted and vulnerable to being gamed later by lawyers and accountants in the tax avoidance industry.
“The Republicans have managed to take a bad bill and make it worse,” said Senate Democratic leader Chuck Schumer. “Under the cover of darkness and with the aid of haste, a flurry of last-minute changes will stuff even more money into the pockets of the wealthy and the biggest corporations.”
No Democrats voted for the bill, but they were unable to block it because Republicans hold a 52-48 Senate majority.
Talks will begin, likely next week, between the Senate and the House of Representatives, which has already approved its own tax bill.
Mr. Trump wants that to happen before the end of the year, allowing him and his Republicans to score their first major legislative achievement of 2017, despite controlling the White House, the Senate and the House since he took office in January.
Under the Bill, the corporate tax rate would be permanently slashed to 20% from 35%, while future foreign profits of U.S.-based firms would be largely exempted from tax — both changes pursued by corporate lobbyists for years.
On the individual side of the tax code, the top tax rate paid by the highest-income earners would be cut slightly.
The Tax Policy Center, a nonpartisan think tank, analysed an earlier but broadly similar version of the bill passed by the Senate tax committee on Nov. 16 and found it would reduce taxes for all income groups in 2019 and 2025, with the largest average tax cuts going to the highest-income Americans.
