LDN - Business

House to vote again on tax bill; Trump on verge of win

[December 20, 2017] By David Morgan and Amanda Becker

WASHINGTON (Reuters) - The Republican-controlled U.S. House of Representatives on Wednesday was expected to give final approval to a sweeping tax bill and send it to President Donald Trump to sign into law, sealing his first major legislative victory in office.

In the largest overhaul of the U.S. tax code in 30 years, Republicans in mere weeks steamrolled over the opposition of Democrats to slash taxes for corporations and the wealthy, while offering mixed, temporary tax relief to working American individuals and families.

The Senate approved the bill in the wee hours of Wednesday morning on a 51-48 vote, but had to send it back to the House, which had passed it on Tuesday, for another vote due to a procedural foul-up that embarrassed Republicans, but was not expected to change the outcome. The vote was expected to take place before noon in the House on Wednesday.

(For a graphic on Republican tax bill's tax brackets and rates, click http://tmsnrt.rs/2BJnrIV)

The sprawling, debt-financed legislation cuts the U.S. corporate income tax rate to 21 percent from 35 percent, gives other business owners a new 20 percent deduction on business income and reshapes how the government taxes multinational corporations along the lines the country's largest businesses have recommended for years.

Millions of Americans would stop itemizing deductions under the bill, putting tax breaks that incentivize home ownership and charitable donations out of their reach, but also making tax returns somewhat simpler and shorter.

It keeps the present number of tax brackets, but adjusts many, though not all, of the rates and income levels for each one. The top tax rate for high earners is reduced. The estate tax on inheritances is changed so far fewer people will pay.

In two provisions added on to secure needed Republican votes, it also repeals part of the Obamacare health system and allows oil drilling in Alaska's Arctic National Wildlife Refuge.

Democrats have railed against the legislation as a giveaway to the wealthy and the business community that will widen the income gap between rich and poor, while adding $1.5 trillion over the next decade to the $20 trillion national debt, which Trump promised in 2016 he would eliminate as president.

Democratic Senator Chris Van Hollen said the bill "will harm millions of middle-class families ... It contains huge, permanent giveaways for big banks and corporations, and asks our children, millions of working Americans and senior citizens, and future generations to pay the price."

A few Republicans, whose party was once defined by its fiscal hawkishness, have protested the deficit-spending encompassed in the bill. But most of them have voted for it anyway, saying it would help businesses and individuals, while boosting an already expanding economy they see as not growing fast enough.

“We’ve had two quarters in a row of 3 percent growth. The stock market is up. Optimism is high. Coupled with this tax reform, America is ready to start performing as it should have for a number of years,” said Senate Republican leader Mitch McConnell after the chamber's vote.

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Senate Majority Leader Mitch McConnell, accompanied by members of the Republican Conference, speaks at a news conference about the passage of the Tax Cuts and Jobs Acts at the U.S. Capitol in Washington, U.S., December 20, 2017. REUTERS/Aaron P. Bernstein

Despite Trump administration promises that the tax overhaul would focus on the middle class and not cut taxes for the rich, the nonpartisan Tax Policy Center, a think tank in Washington, estimated middle-income households would see an average tax cut of $900 next year under the bill, while the wealthiest 1 percent of Americans would see an average cut of $51,000.

The prospect of a Republican victory was tinged with embarrassment. House lawmakers initially voted 227-203, largely along party lines, to approve the bill on Tuesday afternoon.

The measure went to the Senate, where the parliamentarian ruled three minor provisions in violation of an arcane Senate rule. To proceed, the Senate deleted the three provisions and then approved the bill.

Because the House and Senate must approve the same legislation before Trump can sign it into law, the Senate's late Tuesday vote only ping-ponged the bill back to the House.

The measure was expected to pass again in a vote by midday.

In an overnight post on Twitter Trump said he would hold a news conference at 1 p.m. EST (1800 GMT) if the House approves it.

Democrats pounced on the mistake as evidence of the hurried, often secretive process used by Republicans in developing the bill. Ignoring Democrats and much of their own rank-and-file, Republican congressional leaders and White House officials drafted the bill behind closed doors, unveiling it on Sept. 27.

No public hearings were held and numerous narrow amendments favored by lobbyists were added late in the process, tilting the package more toward businesses and the wealthy.

"When future generations look back at the short and messy history of the Republican tax bill, its most enduring lesson will be what it has taught us about how not to legislate," said Senate Democratic Leader Chuck Schumer on the Senate floor.

"After only a few months of frantic backroom negotiations by only one party, we are left with a product as sloppy and as partisan as the process used to draft it ... What a disgrace."

U.S. House Speaker Paul Ryan defended the bill in television interviews on Wednesday morning, saying support would grow for the tax plan after it passes and Americans felt relief.

"I think minds are going to change," Ryan told ABC's "Good Morning America" program.

(For a graphic on U.S. debt level since 1950, click http://reut.rs/2B3Yl3C)

(Reporting by David Morgan and Amanda Becker; Additional reporting by Richard Cowan and Susan Heavey; Editing by Kevin Drawbaugh and Jeffrey Benkoe)

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