Republicans reach deal on final US tax legislation

US President Donald Trump speaks about tax reform legislation during a lunch with lawmakers including Senator Orrin Hatch (right), Republican of Utah, and Representative Kevin Brady (left), Republican of Texas, in the Cabinet Room at the White House in Washington on Dec 13, 2017. PHOTO: AFP

WASHINGTON (REUTERS) - Congressional Republicans have reached a deal on final tax legislation, the top Senate Republican tax writer said on Wednesday (Dec 13), an achievement that would clear the way for final votes in the Senate and House of Representatives next week.

"I think we've got a pretty good deal," Senate Finance Committee chairman Orrin Hatch told reporters as he prepared to join other Republicans for lunch with US President Donald Trump.

Hatch declined to discuss details, but said he was confident the agreement would win enough votes for final passage.

With their defeat on Tuesday in an Alabama special Senate election, Republicans were under increased pressure to complete their proposed overhaul of the US tax system as planned before Christmas and before a new Democratic Alabama senator is seated.

Hatch's remarks appeared to reinforce expectations that a final vote could begin in the Senate as early as Monday.

Democrat Doug Jones' capture of the Alabama Senate seat came hours ahead of a planned Senate-House conference meeting capping days of closed-door discussions to nail down a final corporate income tax rate, a top rate for individuals and other details.

When Jones, who upset Republican Roy Moore in the deeply conservative southern state, arrives in Washington, the Republicans' already slim Senate majority will narrow to 51-49, further complicating Trump's legislative agenda.

Fast action by Republicans on taxes would prevent Jones from upsetting the expected vote tallies on this Bill since he will not likely be seated until late December or early January.

Senate Democratic leader Chuck Schumer called on Republicans to delay a vote on overhauling the tax code for the first time in 30 years until Jones can be seated, but that was unlikely.

Before Hatch spoke, Republicans were trying to finalise details without increasing the legislation's deficit impact. It is expected to add as much as US$1.5 trillion to the US$20-trillion national debt over the next decade.

Both the House and Senate Bills propose slashing the corporate tax rate to 20 per cent from 35 per cent. But negotiators were discussing whether to raise that rate to 21 per cent in the final Bill, lawmakers said.

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President Donald Trump said on Wednesday he would accept and sign a bill with a corporate tax rate of 21 percent.

Republicans were said to be leaning toward setting the corporate rate at 21 per cent and the top individual income tax rate at 37 per cent, down from 39.6 per cent.

A one-per centage-point change in the corporate rate would give tax writers about US$100 billion of revenues over a decade that could be used in many ways. One could be to repeal a federal tax on inheritances paid by wealthy Americans. Another might be to end the corporate alternative minimum tax.

Some Republicans also wanted a higher corporate rate to pay for a higher child tax credit.

Lawmakers had also debated capping a popular individual deduction for mortgage interest at US$750,000 in home loan value, instead of US$1 million.

Trump is seeking to sign a tax Bill by the end of the year to achieve Republicans' first major legislative victory since they took control of both chambers of Congress and the White House in January.

After his lunch with Republican lawmakers, Trump will speak on tax legislation alongside five middle class families who would benefit, senior administration officials said.

He wants to try to counter claims that the Republican tax plan would largely benefit corporations and the wealthy by saying it would also cut rates for lower- and middle-income taxpayers, who could see additional benefits, such as higher wages, the officials said.

The nonpartisan Joint Committee on Taxation and Congressional Budget Office have both concluded that wealthier taxpayers would disproportionately benefit from the Republican proposals.

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