WASHINGTON – The United States Senate passed on Saturday morning tax reforms promoted by US President Donald Trump that will see the biggest tax cut in the last 30 years but also a significant increase in budget deficits.
The Senate passed the bill with 51 in favor, all of them Republicans, and 49 against.
Trump took to Twitter to celebrate the victory in the Senate.
“We are one step closer to delivering MASSIVE tax cuts for working families across America. Special thanks to (Senate Majority Leader) Mitch McConnell and (Senate Finance Committee Chairman) Orrin Hatch for shepherding our bill through the Senate. Look forward to signing a final bill before Christmas!” the president wrote shortly after the legislation was passed.
Later Saturday morning, Trump delivered a similar message.
“Biggest Tax Bill and Tax Cuts in history just passed in the Senate. Now these great Republicans will be going for final passage. Thank you to House and Senate Republicans for your hard work and commitment!”
Republican leaders in the Senate now will have to reconcile the text passed on Saturday with the version of their colleagues from the House of Representatives before Trump can enact his long-desired tax reform.
Voting began at 1:36 am Saturday after 10 hours of debate and four amendments were voted on late Friday night.
Passage of the tax bill in both houses draws Trump closer to his first big legislative triumph and comes just over four months after key Republican defections sank efforts to repeal the 2010 Affordable Care Act (ACA) health-care law, which is commonly known as Obamacare and was the signature domestic policy initiative of Barack Obama’s 2009-2017 presidency.
The tax bill that emerges from the reconciliation process must be subjected to a new vote in both houses of Congress.
Trump has touted the ambitious tax overhaul as necessary to jumpstart economic activity and achieve an expansion in gross domestic product (GDP) of more than 3 percent annually, although a congressional analysis said the Senate bill would add more than $1 trillion to federal deficits over the next decade even after taking into account higher growth rates.
The focal point of the Republicans’ proposals is a reduction in the corporate tax rate from 35 percent to 20 percent. That cut would take effect next year in the House version, while the Senate sets a 2019 start date.
The Senate bill would keep the number of tax brackets at seven (although with lower rates), while the House legislation would reduce them to four: 12 percent, 25 percent, 35 percent and 39.6 percent.
Under the House bill, the 12 percent rate applies to annual income of up to $45,000 for an individual and $90,000 for a married couple, while the 25 percent rate applies to income of up to $200,000 for an individual and $260,000 for couples.
The highest rate is for income exceeding $500,000 in the case of individuals and more than $1 million in the case of couples.
Although the Senate bill promises tax cuts for both families and individuals, the Joint Committee on Taxation said in its latest estimate that only 44 percent of Americans will see their tax bills reduced by more than $500 in 2019.
House Speaker Paul Ryan said in announcing the lower chamber’s bill early last month that a typical family of four would save $1,182. The lower house passed that bill on Nov. 16 by a comfortable margin despite unified Democratic opposition.
Also included in the Senate bill is an amendment that repeals Obamacare’s individual mandate to purchase health insurance (or else pay a penalty), which is considered the keystone of the ACA because it requires healthy people to enter the risk pool and helps offset costs for insurers.
The House bill would not repeal the Obamacare mandate.
The White House-backed revision of the US tax code is the biggest since a 1986 overhaul that easily sailed through both the House and Senate with broad bipartisan support.
Passage of the tax overhaul gives Republicans a boost heading into midterm elections in 2018 that will serve as a referendum on Trump’s presidency.