Duelling Republican tax plans advance in Congress
WASHINGTON: US Senate Republicans unveiled a tax plan on Thursday that differed from the House of Representatives’ version on several key fronts, including how they treat the corporate tax rate, the tax deduction for state and local taxes, and the estate tax.
Complicating a Republican push for the biggest overhaul of US tax law since the 1980s, senators said that, like the House, they wanted to slash the corporate tax rate to 20 per cent from 35 per cent, but in 2019, not right away.
The House was set to vote on its measure next week after its tax-writing Ways and Means Committee approved the legislation on Thursday along party lines, with Democrats united in opposition.
The Senate’s timetable was less clear, with a formal bill yet to be drafted in that chamber, where Republicans have a much smaller majority and a narrower path to winning approval for any legislation, let alone one as contentious as a tax package.
As President Donald Trump toured Asia, Republicans reiterated their goal of enacting final legislation by the end of the year. If that happens, it would be Trump’s first major legislative accomplishment since he took office in January.
Stocks, which have rallied this year on hopes for business tax cuts, declined as details of the two plans emerged. Investors worried about divergence between the House and Senate and the Senate’s proposed corporate tax rate cut delay.
In a broad sense, the House and Senate plans matched up in calling for deep tax cuts for high-earners and businesses and for a dramatic reshaping of how the United States taxes multinational corporations, big winners if the plans become law.
Democrats, largely ignored in the closed-door drafting of both bills, have condemned them as giveaways to the rich and businesses that will do little for ordinary Americans.
White House economic adviser Gary Cohn handed them ammunition in comments in a CNBC interview, saying: “The most excited group out there plan.”
The White House issued statements that praised the Ways and Means Committee and the tax-writing Senate Finance Committee and expressed confidence that further progress would be made. are big CEOs, about our tax
Victories by Democrats in state and local elections in Virginia, New Jersey and elsewhere on Tuesday increased the urgency for Republicans, who control both the White House and Congress, to make good on their campaign promises on taxes.
“We’re going to get this over the finish line,” House Speaker Paul Ryan said, adding the House would not just approve whatever the Senate passes and that a House-Senate conference committee would be needed to reconcile differences.
One big disagreement between the two chambers concerns a deduction now available to Americans for state and local taxes (SALT), a keen concern for taxpayers in high-tax, typically Democratic-leaning states such as California, New York, New Jersey, Connecticut and Massachusetts.
The Senate plan would entirely repeal the SALT deduction. The House bill would repeal it only for state and local income and sales tax, but preserve it for property tax up to $10,000.
Democratic Senate leader Chuck Schumer of New York said repealing the SALT deduction and other parts of the Republican proposals would hurt middle- and upper-middle-class Americans.