US tax reforms: Senate approves sweeping overhaul as Donald Trump nears major victory
Posted On August 2, 2020
Congress has all but passed Donald Trump’s $1.5 billion tax plan in a Christmas time boost for the president.
The House of Representatives and the Senate voted through the legislation after Republican critics fell into line on Tuesday.
Mr Trump is expected to sign the bill into law on Wednesday after another vote in the House, needed because of a procedural hiccup on the initial vote.
For weeks lawmakers have been merging two different version of the legislation that were passed separately by the two congressional bodies.
The final version slashes the corporation tax rate from 35 per cent to 21 per cent – just two points behind Britain’s current rate of 19 per cent.
It will also decrease the income tax rate for most earnings brackets and double the amount someone can pass on tax-free through inheritance.
Today we are giving the people of this country their money backHouse Speaker Paul Ryan
The legislation is the biggest shake-up in America’s taxation system for three decades and helps Mr Trump prove to critics that he can work with mainstream Republicans.
Mr Trump has framed his law as a tax cut for the middle class, but independent analysis suggests high-earners and corporations are the biggest winners in the long term.
It will add an estimated $1 trillion to the US deficit and remove a key part of Barack Obama’s healthcare plan which forces people to get health insurance.
Mike Pence, the vice president, delayed a trip to Israel and Egypt to be available if needed to vote for the bill. The vice president has the deciding vote if the Senate is tied 50-50.
But he was not needed as the legislation passed the Senate 51 to 48, following the House approving of the law by 227 to 203.
Mr Trump has dubbed the tax cut “historic” and said passing the bill before the end of the year will give voters “a big, beautiful Christmas present”.
The law will be Mr Trump’s first major legislative victory since entering office and defies critics who questioned his ability to have success on Capitol Hill.
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Republicans hope the legislation can win over wavering voters for the 2018 mid-term elections and ensure the party keeps control of the House of Representatives and the Senate.
Opinion polls suggest the public are sceptical about the bill but leading Republicans have said it will gain public approval once its effects become clear.
Paul Ryan, the most senior Republican in the House of Representatives, said “results are going to make this popular” when challenged about the level of support. He called the passing of the bill a “generational defining moment”.
Video: Analysis of US tax cut proposals