U.S. Senate approves major tax cuts in legislative win for Trump

The U.S. Senate narrowlyapproved a tax overhaul on Saturday, moving Republicans andPresident Donald Trump a big step closer to their goal ofslashing taxes for businesses and the rich while offeringeveryday Americans a mixed bag of changes.

In what would be the largest change to U.S. tax laws sincethe 1980s, Republicans want to add $1.4 trillion US over 10 yearsto the $20 trillion national debt to finance changes that theysay would further boost an already growing economy.

"We are one step closer to delivering MASSIVE tax cuts forworking families across America," Trump said in an early morningtweet.

U.S. stock markets have rallied for months in the hope thatWashington would provide significant tax cuts for corporations.

Hope for companies to invest more

Celebrating their Senate victory, Republican leaderspredicted the tax cuts would encourage U.S. companies to investmore and boost economic growth.

"We have an opportunity now to make America morecompetitive, to keep jobs from being shipped offshore and toprovide substantial relief to the middle class," said MitchMcConnell, the Republican leader in the Senate.

The Senate approved their bill in a 51-49 vote withDemocrats complaining that last-minute amendments to win overskeptical Republicans were poorly drafted and vulnerable tobeing gamed later by lawyers and accountants in the taxavoidance industry.

'Flurry of last-minute changes'

"The Republicans have managed to take a bad bill and make itworse," said Senate Democratic leader Chuck Schumer. "Under thecover of darkness and with the aid of haste, a flurry oflast-minute changes will stuff even more money into the pocketsof the wealthy and the biggest corporations."

No Democrats voted for the bill, but they were unable toblock it because Republicans hold a 52-48 Senate majority.

Talks will begin, likely next week, between the Senate andthe House of Representatives, which has already approved its owntax bill.

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Trump wants that to happen before the end of the year,allowing him and his Republicans to score their first majorlegislative achievement of 2017, despite controlling the WhiteHouse, the Senate and the House since he took office in January.

Republicans failed in their efforts to repeal the Obamacarehealthcare law over the summer and Trump's presidency has beenhit by White House in-fighting and by a federal investigationinto possible collusion last year between his election campaignteam and Russian officials.

Seen as crucial for mid-term elections

The tax overhaul is seen by Trump and Republicans as crucialto their prospects at mid-term elections in November 2018, whenthey will have to defend their majorities in Congress.

In a legislative battle that moved so fast a final draft ofthe bill was unavailable to the public until just hours beforethe vote, Democrats slammed the proposed tax cuts as a giveawayto businesses and the rich financed with billions of dollars intaxpayer debt.

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The framework for both the Senate and House bills wasdeveloped in secret over a few months by a half-dozen Republicancongressional leaders and Trump advisers, with little input fromthe party's rank-and-file and none from Democrats.

Six Republican senators, who wanted and got last-minuteamendments and whose votes had been in doubt, said on Fridaythey would back the bill and did so.

Senator Bob Corker, one of few remaining Republican fiscalhawks who pledged early on to oppose any bill that expanded thefederal deficit, stood out as the lone Republican dissenter.

"I am not able to cast aside my fiscal concerns and vote forlegislation that ... could deepen the debt burden on futuregenerations," said Corker, who is not running for re-election.

Property tax deductible

Numerous last-minute changes were made to the bill on Fridayand in the early morning hours of Saturday.

One was to make state and local property tax deductible upto $10,000, mirroring the House bill. The Senate previously hadproposed entirely ending state and local tax deductibility.

In another change, the alternative minimum tax (AMT), bothfor individuals and corporations, would not be repealed in full.Instead, the individual AMT would be adjusted and the corporateAMT would be maintained as is, lobbyists said.

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Another change would put a five-year limit on lettingbusinesses immediately write off the full value of new capitalinvestments. That would phase out over four years starting inyear six, rather than be permanent as initially proposed.

Under the bill, the corporate tax rate would be permanentlyslashed to 20 percent from 35 percent, while future foreignprofits of U.S.-based firms would be largely exempted from tax both changes pursued by corporate lobbyists for years.

On the individual side of the tax code, the top tax ratepaid by the highest-income earners would be cut slightly.

Reducingtaxesfor all income groups

The Tax Policy Center, a nonpartisan think tank, analyzed anearlier but broadly similar version of the bill passed by theSenate tax committee on Nov. 16 and found it would reduce taxesfor all income groups in 2019 and 2025, with the largest averagetax cuts going to the highest-income Americans.

Two Republican senators announced their support for the billon Friday after winning more tax relief for non-corporatepass-through businesses. These include partnerships and othercompanies not organized as public corporations, ranging frommom-and-pop concerns to large financial and real estate groups.

The bill now features a 23-per-cent tax deduction for suchbusiness owners, up from the original 17.4 per cent.

Trump companies will benefit, says Democrat

Democratic Senator Richard Blumenthal said Trump controlsmore than 500 pass-through companies that will directly benefit."So the president may be celebrating, but most Americans willrue this day," Blumenthal said.

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The Senate bill would gut a section of Obamacare byrepealing a fee paid by some Americans who do not buy healthinsurance, a step critics said would undermine the Obamacaresystem and raise insurance premiums for the sick and the old.

Senator Susan Collins, a moderate Republican, said sheobtained commitments from Republican leaders that steps would betaken later in separate legislation to minimize the impact ofthe repeal of the "individual mandate" fee.