Trump’s huge tax cut within reach
UNITED STATES: US President Donald Trump is within touching distance of the most sweeping tax reform in America since the Reagan era, and the first legislative victory of his term.
Trump has marketed his Republican Party’s plans for a US$1.5 trillion (NZ$x2.14t) tax cut in populist terms, promoting it as a bonanza for middle-class families who are the ‘‘backbone and the heartbeat of our country’’ but have suffered a decade or more of stagnant wages. ‘‘We want to give you, the American people, a giant tax cut for Christmas,’’ he said at the White House this week.
Not every middle-class family is destined for a cut, however and some will probably pay more tax. Their tax bills will vary according to marital status, family size, career paths, and what deductions a household claims. For many middle-income families, the benefits will diminish - or disappear entirely - by the end of the next decade.
Trump has tied his political fortunes to the fate of the American economy, citing the stock market’s rise to record highs. Surveys suggest, however, that many voters are lukewarm on his tax plan, suspicious that the billionaire former real estate tycoon and his family’s business empire will be among its biggest beneficiaries.
At the heart of the final tax bill poised to emerge from Capitol Hill today are a cut in the corporate tax rate, windfalls for affluent business owners, and benefits to heirs of large estates.
Marco Rubio, a Republican senator, has rebuked his party for helping the wealthy over working families, and has threatened to vote against the bill.
Under the plan, being finalised by Republicans in the House and Senate, the corporate tax rate is expected to be cut from 35 per cent to 21 per cent. The top rate paid by the wealthiest Americans is expected to be cut from 39.6 per cent to 37 per cent. Overall, taxes would be slashed by about US$1.5t over a decade.
The legislation has rattled through Congress so quickly that some provisions in preliminary bills passed by the House and Senate carried unintended consequences. The Senate bill, for instance, would have killed off a tax credit that US companies use to fund research and development. Another provision meant that some business owners could have faced tax rates of more than 100 per cent.
Republican candidate Roy Moore’s loss to Democrat Doug Jones in the Senate contest in Alabama this week has increased the pressure on the White House. Republicans have rebuffed Democratic demands that any votes on tax be postponed until Jones takes his seat. Instead, GOP leaders are hopeful that they will deliver a tax bill to Trump’s desk to be signed before Christmas.
The White House is leaving little to chance. Vice-President Mike Pence has delayed a trip to the Middle East scheduled for next week. He will stay in Washington, on hand to cast a potential deciding vote should two Republican senators rebel against the tax plans.
Arizona Senator John McCain has been in hospital after being treated for cancer. Several other GOP senators have expressed reservations over aspects of the tax plan and could make a final stand to extract concessions.
Trump moved into sales mode with a pitch aimed at the bluecollar voters who helped to elect him. A typical family of four earning US$75,000 would see an income tax cut of more than US$2000, he said at a White House event, halving their tax bill. ‘‘We are reclaiming our destinies as Americans, a nation that thinks big, dreams bigger and always reaches for the stars,’’ he said, flanked by working families. – The Times