WASHINGTON • The Republican-controlled US House of Representatives was set to give final approval to a sweeping tax Bill today and send it to President Donald Trump to sign into law, sealing his first major legislative victory in office.
In the largest overhaul of the US tax code in 30 years, Republicans in mere weeks steamrolled over the opposition of Democrats to slash taxes for corporations and the wealthy, while offering mixed, temporary tax relief to working American individuals and families.
The Senate approved the Bill yesterday in a 51-48 vote, but had to send it back to the House, which had passed it on Tuesday, for another vote due to a procedural foul-up that embarrassed Republicans.
The sprawling, debt-financed legislation cuts the US corporate income tax rate to 21 per cent from 35 per cent, gives other business owners a new 20 per cent deduction on business income, and reshapes how the government taxes multinational corporations along the lines that the country's largest businesses have recommended for years.
Millions of Americans would stop itemising deductions under the Bill, putting tax breaks that incentivise home ownership and charitable donations out of their reach, but also making tax returns somewhat simpler and shorter.
It keeps the present number of tax brackets, but adjusts many, though not all, of the rates and income levels for each one. The top tax rate for high earners is reduced. The estate tax on inheritances is changed so far fewer people will pay.
The tax overhaul would have extensive impact on nearly all US domestic companies and Singapore companies with investments in the United States, said Ms Wong Hsin Yee, a partner for international tax services at Ernst & Young Solutions.
"Some of the proposed changes would be well received, such as the lowering of the federal tax rate from one of the highest in the world at 35 per cent, to 21 per cent, and the immediate expensing of qualified machinery and equipment purchases," she told The Straits Times in an e-mail.
Mr Chris Woo, a tax leader at PwC Singapore, said the reforms could also affect US firms based here.
"The US tax reform aims to attract US investors to bring income and jobs back to the US. With the US tax reform, we will likely see more US corporations rethink their investments in jurisdictions outside the US, including Singapore," he told The Straits Times.
Democrats have railed against the legislation as a giveaway to the wealthy and the business community that will widen the income gap between the rich and the poor, while adding US$1.5 trillion (S$2 trillion) over the next decade to the US$20 trillion national debt, which Mr Trump promised last year he would eliminate as president.
Stock markets mostly fell yesterday as investors took a breather. US stocks were marginally weaker after a month-long rally in anticipation of Congress approving the overhaul of the tax code.
•Additional reporting by Yasmine Yahya