House, Se­nate set up con­flict­ing tax-re­form plans

The Weekend Australian - - WORLD -

WASH­ING­TON: House Repub­li­cans ad­vanced their tax over­haul yes­ter­day but the US Se­nate un­veiled a com­pet­ing ver­sion with key dif­fer­ences, sig­nalling a po­ten­tial clash within Pres­i­dent Don­ald Trump’s party.

Repub­li­cans in congress have seized on the need to re­form and sim­plify the na­tion’s cum­ber­some tax code with leg­is­la­tion that slashes taxes for cor­po­ra­tions and Amer­i­can fam­i­lies.

Mr Trump, des­per­ate for a ma­jor con­gres­sional achieve­ment in his first year in of­fice fol­low­ing the col­lapse of his health care re­form ef­fort, is push­ing an am­bi­tious time­line: a tax bill on his desk by year’s end.

The House plan is on track for a floor vote next week, se­nior Repub­li­can Kevin McCarthy said, af­ter the mea­sure passed the Ways and Means Com­mit­tee by 24 to 16 votes along party lines.

The White House hailed the ad­vance­ment as “an im­por­tant step,” and ex­pressed con­fi­dence that “with con­tin­ued co-op­er­a­tion with congress, we will achieve these pri­or­i­ties this year”.

Mr Trump’s of­fice also ap­plauded the Se­nate for re­leas­ing its ver­sion, even as the new leg­is­la­tion shows the Repub­li­cans in the two cham­bers are at odds.

Although the House bill per­ma­nently cuts the cor­po­rate tax rate from 35 per cent to 20 per cent, ef­fec­tive next year, the Se­nate ver­sion would de­lay that cut un­til the fol­low­ing year. De­lay­ing that re­duc­tion would lower the cost of the bill to the Trea­sury, but the de­lay is op­posed by the White House and some Se­nate Repub­li­cans. “The pres­i­dent would like this to go into ef­fect right away,” Trea­sury Sec­re­tary Steven Mnuchin told Fox Busi­ness Net­work.

The House ver­sion also main­tains the na­tion’s top tax bracket for the wealth­i­est in­di­vid­u­als at 39.6 per cent, while the Se­nate bill low­ers the top tier to 38.5 per cent.

Se­nate rules al­low for the mea­sure to add $1.5 tril­lion (al­most $2 tril­lion) to the deficit across 10 years. But with the cuts ex­pected to cost far more, leg­is­la­tors have scram­bled to find other ways to boost rev­enue and cut spend­ing to cover the costs.

Repub­li­cans in­sist dra­mat­i­cally low­er­ing cor­po­rate tax rates would send the US econ­omy soar­ing, and of­fer­ing a repa­tri­a­tion tax hol­i­day would bring a tidal wave of in­ter­na­tion­ally held money flood­ing back into the coun­try.

With in­ter­nal ten­sions sim­mer­ing over what should be in­cluded in the largest tax over­haul since Ron­ald Rea­gan’s 1980s pres­i­dency, House Speaker Paul Ryan in­sisted the de­tails would be “ironed out” be­tween the two com­pet­ing plans. “It takes time. But trust me, we are go­ing to get this over the fin­ish line,” he said.

Repub­li­cans will likely have to go it alone, as Democrats in both cham­bers have united in op­po­si­tion.

Democrats have pointed to a pre­lim­i­nary study by the Tax Pol­icy Cen­tre that said that un­der the House bill, at least 7 per cent of tax­pay­ers would pay higher taxes in 2018.

AP

Paul Ryan with Repub­li­can whip Steve Scalise, who was shot at con­gres­sional base­ball prac­tice in June

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