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US Senate approves Donald Trump’s tax overhaul

, December 20, 2017, 0 Comments

us-senate-tax-marketexpress-inThe US has approved the largest rewrite of the US tax code in more than 30 years. The House of Representatives, which had already passed an earlier draft, is expected to give its final approval later on Wednesday.

The US Senate narrowly approved sweeping tax reforms in the early hours of Wednesday, putting President Donald Trump within touching distance of his first major legislative victory.

The bill passed the Senate along party lines by 51 votes to 48. All Democrats voted against Trump’s tax overhaul, which hands tax breaks to corporations and drops rates for families at all income levels, with the largest benefits going to America’s wealthiest.

Vice President Mike Pence presided over the Senate Chamber in case he needed to break a tied vote. After the bill passed the Senate floor, Pence proclaimed to loud cheers that “the Tax Cuts and Jobs Act has passed.”

Shortly after the Senate approved the bill, Trump took to Twitter, saying: “The United States Senate just passed the biggest in history Tax Cut and Reform Bill. Terrible Individual Mandate (ObamaCare) Repealed.”

The bill will now go back to the House of Representatives, who will vote on it again later on Wednesday.

Delay in the vote

US Republicans had already passed sweeping tax reforms in the House of Representatives on Tuesday, but were forced to send the bill back for revision after it appeared to violate Senate rules.

About an hour after the bill passed the House, the Senate voted along party lines to debate the legislation after it emerged the bill would have to be modified as three provisions appeared to violate Senate rules.

‘Mad dash’

The offending provisions related to educational savings accounts for home schooling and private university endowments.

“In the mad dash to provide tax breaks for their billionaire campaign contributors, our Republican colleagues forgot to comply with the rules of the Senate,” Democrat Senators Bernie Sanders and Ron Wyden said in a joint statement after the blunder emerged.

If it eventually passes, as expected, the $1.5-trillion (€1.27-trillion) package will provide steep tax cuts for businesses and the wealthy and more modest cuts for middle- and low-income families starting in January and February 2018. It revamps how the US taxes multinational companies, and introduces a new tax deduction for the owners of “pass-through” businesses, ranging from mom-and-pop stores to large real estate and financial enterprises.

However, while corporate tax cuts will remain permanent, cuts for individuals will expire in 2026 to comply with Senate rules.

Initial jubilation

President Donald Trump initially celebrated the bill’s passing by the House on Twitter, congratulating House Speaker Paul Ryan along with Representatives Kevin McCarthy, Steve Scalise and Cathy McMorris Rodgers, who he called “great House Republicans who voted in favor of cutting your taxes!”

Ryan hailed the package, saying “today, we give the people of this country their money back.”

The House initially voted largely along party lines: 227-203, with zero Democrats voting in favor. Voting is expected to be exceptionally close in the Senate with Vice President Mike Pence delaying a controversial Middle East trip in case he was needed to break a tie.

US stocks fell on Tuesday over concern about the bill’s effect on years of monetary policy stimulus and the future of interest rates.

GOP Senate leader McConnel: ‘Public will learn to love it’

Despite passing in both chambers,  Trump’s tax reform package remains deeply unpopular with most of the public, who see the bill’s biggest benefits going to the wealthy. The Republican’s drive to slash taxes is also expected to push the US’ national debt even higher.

Democrats have labelled it a “giveaway” to corporations, who they don’t see hiring more workers or raising wages on the back of the breaks.

Nevertheless, Republicans insisted that the public would benefit and eventually respond positively. “If we can’t sell this to the American people, we ought to go into another line of work,”   Senate Majority Leader Mitch McConnell said.

“The proof will be in the paychecks,” Rob Portman, a Republican Senator from Ohio, said during the nighttime debate. “This is real tax relief, and it’s needed.”

Democrats, however, continued to chide the bill after it passed the Senate, with New York Senator Chuck Schumer telling Republicans “This is serious stuff, we believe you are messing up America.”

Democrats are expected to seize upon the bill’s unpopularity ahead of next year’s congressional elections.

“Every fundraiser, every fat check from a billionaire, and every champagne and caviar party has been about getting to this day, the day when the politicians they put in charge of Washington would pay them back with a $1.5 trillion giveaway,” said Democratic Senator Elizabeth Warren.