Sat, Dec 02, 2017 - Page 6 News List

US Republicans rush to save tax reform bill

‘BAD PRECEDENT’:Senator Ted Cruz opposed including automatic tax hikes, as they could force families into paying higher taxes during an economic downturn

AFP, WASHINGTON

Republicans in the US Senate on Thursday scrambled to salvage their tax plan after it hit unexpected roadblocks, leaving US President Donald Trump still waiting for a major political victory he hopes to secure before year’s end.

Trump had hoped his party would pass the controversial bill as early as Thursday night, handing the White House and Republicans their most significant legislative achievement of his young presidency.

However, after 11th-hour negotiations over how to offset the cost of dramatic tax cuts for corporations and more modest cuts for individuals, Senate Majority Leader Mitch McConnell postponed votes until midday yesterday.

A tense standoff on the Senate floor threw the bill’s fate into question, after a new projection showed the measure would add US$1 trillion to the federal deficit.

The analysis complicated Trump’s argument, shared by many Republicans, that the tax cuts would pay for themselves through additional economic growth — and left some senators mulling the addition of future tax hikes into the plan to ensure sufficient revenue.

In a dramatic move, three Republican senators refused to vote on a procedural measure until they were assured that more changes could be made to the legislation.

Republicans hold a narrow 52-48 Senate majority. Three defectors would kill the bill, and a handful were showing reservations about a measure that experts have said would benefit corporations and the wealthy.

US Senator Bob Corker, who has publicly criticized Trump in recent months, wants a “trigger” inserted to raise taxes if revenues fall short of projections.

However, the Senate parliamentarian told lawmakers that such a mechanism would not be allowed under budget rules.

Republicans ultimately voted to proceed, but the showdown highlighted the delicate balancing act in getting the tax plan across the finish line.

“It doesn’t look like the trigger is going to work,” US media quoted Republican Senator John Cornyn as saying.

One option for boosting revenue would be to raise corporate tax rates after six years, perhaps by half a percentage point per year, Cornyn said.

As it stands, the bill would reduce the corporate rate from 35 percent to 20 percent. Trump has repeatedly called for a 20 percent corporate rate.

Lawmakers were seeking new ways to circumvent the unexpected snags.

Political news site Roll Call quoted Senator Lindsey Graham as saying that he felt “confident that if there’s a shortfall in the projections that there’ll be a mechanism in the bill to deal with the deficit.”

However, Senator Ted Cruz warned that inserting automatic tax hikes would set a “bad precedent,” because they could force US families into paying higher taxes during an economic downturn.

Some conservatives have bridled at seeing their party trample the anti-deficit budget orthodoxy they preached during the Obama presidency: The bill before them would balloon the national deficit by US$1.4 trillion over the coming decade, the US Congressional Budget Office estimated.

If the legislation passes the Senate, it still must be reconciled with the recently passed US House of Representatives version. The plans differ on some points.

As Republican leaders scrambled to overcome final objections and lock down necessary votes, their essential argument was a simple one: If they fail on tax reform, they can expect major losses in midterm elections in November next year.

This story has been viewed 1904 times.

Comments will be moderated. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned.

TOP top