WASHINGTON • United States President Donald Trump has defended a Republican tax-cut plan against Democratic charges that it favours the rich, saying it will be "one of the great Christmas gifts" for the middle class with just days to go before Congress votes.
With a vote on the biggest tax rewrite in three decades set for tomorrow, Republicans were working to ensure that party members were holding the line in favour of the legislation against entrenched Democratic opposition.
The plan was finalised last Friday after Republican senators Marco Rubio and Bob Corker pledged their support. Three Republican senators, enough to defeat the measure in a Senate that Mr Trump's party controls with a slim 52-48 majority, remained uncommitted: Ms Susan Collins, Mr Jeff Flake and Mr Mike Lee.
Passage in Congress would provide Republicans and Mr Trump with their first major victory since he took office in January.
"It's going to be one of the great Christmas gifts to middle-income people," Mr Trump told reporters at the White House last Saturday before he boarded a helicopter for meetings at Camp David.
"The Democrats have their sound bite, the standard sound bite before they even know what the Bill is all about," he added.
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KEY POINTS OF FINAL U.S. REPUBLICAN TAX BILL
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1. Business corporate tax rate: Cuts corporate income tax rate to 21 per cent from 35 per cent, beginning Jan 1.
2. Pass-throughs: Creates a 20 per cent deduction for the first US$315,000 (S$425,000) of qualified business income for joint filers of pass-through businesses such as partnerships and sole proprietorships. For income above that threshold, the legislation phases in limits that produce an effective marginal tax rate of no more than 29.6 per cent.
3. Corporate minimum tax: Repeals the 20 per cent federal corporate alternative minimum tax, which was set up to ensure that profitable corporations pay at least some tax.
4. Territorial system: Exempts United States corporations from US taxes on most of their future foreign profits, ending the present system of taxing profits of all US-based businesses, no matter where the profits are earned.
5. Repatriation: Sets a one-time mandatory tax of 8 per cent for illiquid assets and 15.5 per cent for cash and cash equivalents on US$2.6 trillion in US business profits currently held overseas. That foreign cash pile was created by a rule that allowed foreign profits to be tax deferred if they were not brought into the US, or repatriated.
6. Anti-base erosion measures: Includes provisions to prevent companies from shifting profits out of the US to lower-tax jurisdictions abroad. These include an alternative minimum tax on payments between US corporations and foreign-related companies and limitations on the shifting of corporate income through transfers of intangible property, including patents.
7. Clean energy: Leaves in place tax credits for producing electricity from wind, biomass, geothermal, solar, municipal waste and hydropower.
8. Other provisions Obamacare mandate: Repeals a federal fine imposed on Americans under Obamacare for not obtaining health insurance coverage. Obamacare, otherwise known as the Affordable Care Act, was signed into law by former president Barack Obama in 2010.
REUTERS
The proposed package would slash the US corporate tax rate to 21 per cent and cut taxes for wealthy Americans.
Under an agreement between the House of Representatives and the Senate, the corporate tax would be 1 percentage point higher than the 20 per cent rate earlier proposed, but still far below the current headline rate of 35 per cent, a deep tax reduction that corporations have sought for years.
Democrats have slammed the plan as a giveaway to corporations and the rich that would drive up the federal deficit.
For months, Mr Trump has touted the Bill as a middle-class tax cut. Studies from independent analysts and non-partisan congressional researchers have projected that corporations and the rich would benefit disproportionately.
Mr Trump repeated last Saturday that the tax overhaul would help bring in US$4 trillion (S$5.4 trillion) in foreign profits from US companies. The tax plan proposes new rules for repatriating cash held overseas.
"This is going to bring money in. As an example, we think US$4 trillion is going to be flowing back into the country," he said.
"That's money that's overseas that's stuck there for years and years."
The changes would boost employment, he said, adding that it was essential for US growth.
"The economy now has hit three per cent (growth). Nobody thought it would be anywhere close. I think we could go to 4, 5 or even 6 per cent, ultimately," Mr Trump said.
REUTERS, AGENCE FRANCE-PRESSE
