The US Senate approved a sweeping tax overhaul on Saturday, moving Republicans and President Donald Trump a major 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 US tax overhaul 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.
US stock markets have rallied for months in hopes Washington would provide significant tax cuts for corporations.
Following the 51-49 vote, talks will begin, likely next week, between the Senate and the House of Representatives, which has already approved its own tax bill. The two chambers must craft a single bill to send to Trump to sign into law.
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.
Celebrating their victory, Republican leaders said the tax cuts would encourage US 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 tax overhaul is seen by Republicans as crucial to their prospects in the November 2018 mid-term election campaigns when they will have to defend their majorities in Congress.
In a legislative battle that moved so fast a final draft of the bill was unavailable to the public until just hours before the vote, Democrats slammed the measure as a give-away to businesses and the rich financed with billions in taxpayer debt.
The framework for both the Senate and House bills was developed in secret over a few months by a half-dozen Republican congressional leaders and Trump advisers, with little input from the party's rank-and-file and none from Democrats.
The Senate approved their bill in the wee hours, with Democrats complaining that last-minute amendments circulated among senators 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 lacked the votes to block it because Republicans hold a 52-48 Senate majority.
Republican Senator Bill Cassidy praised the bill and said, “Working families and middle-income families across the nation will be better off. Families who over the last eight years have not done well will begin to do better.”
Numerous last-minute changes were made to the bill on Friday and in the early morning hours of Saturday.
One was to make state and local property tax deductible up to $10,000, mirroring the House bill. The Senate previously had proposed entirely ending state and local tax deductibility.
In another change, the alternative minimum tax (AMT), both for individuals and corporations, would not be repealed in full. Instead, the individual AMT would be adjusted and the corporate AMT would be maintained as is, lobbyists said.
Another change would put a five-year limit on letting businesses immediately write off the full value of new capital investments. That would phase out over four years starting in year six, rather than be permanent as initially proposed.
Under the bill, the corporate tax rate would be permanently slashed to 20 percent from 35 percent, while future foreign profits of US-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, analyzed 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.
Two Republican senators announced their support for the bill on Friday after winning more tax relief for non-corporate pass-through businesses. These include partnerships and other companies not organized as public corporations, ranging from mom-and-pop concerns to large financial and real estate groups.
The bill now features a 23 percent tax deduction for such business owners, up from the original 17.4 percent.
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