US House paves way for Trump tax cuts

House Speaker Paul Ryan wants to see the tax overhaul passed by the Nov 23 Thanksgiving holiday.
House Speaker Paul Ryan wants to see the tax overhaul passed by the Nov 23 Thanksgiving holiday.PHOTO: AGENCE FRANCE-PRESSE

Budget plan squeaks through, with several Republicans against adding to deficit

WASHINGTON • The US House of Representatives helped pave the way for deep tax cuts sought by President Donald Trump and Republican leaders, but barely overcame a revolt within the ranks that could foreshadow trouble ahead.

The Republican-controlled House voted 216-212 on Thursday to pass a Budget blueprint for the 2018 fiscal year. The measure will enable the tax legislation, due to be introduced next week, to win congressional approval without any Democratic votes.

But House Republican leaders came within two votes of failure. Democrats were unified in their opposition, and 20 Republicans voted against the Bill, many expressing disapproval of a provision that would repeal an income tax deduction for state and local taxes.

Discord is also looming over a potential provision to scale back a popular tax-deferred retirement savings programme. Both those provisions are aimed at offsetting revenue losses that would result from the planned sweeping tax cuts, particularly for companies.

Democrats have called the tax plan a giveaway to the rich and corporations that would swell the federal deficit. Republicans are traditionally opposed to letting the deficit grow. But in a stark reversal of that stance, the party's Budget resolution, previously passed by the Senate, called for adding up to US$1.5 trillion (S$2 trillion) to federal deficits over the next decade to pay for the tax cuts. Several conservative Republicans voted against it.

Republican House Speaker Paul Ryan has said he wants the House to pass the tax overhaul by the Nov 23 Thanksgiving holiday. He did not say anything on the possibility of capping tax-free contributions to 401(k) plans, which for four decades have helped millions of Americans save for retirement by offering tax savings.

The Budget plan will enable the 100-seat Senate to pass tax legislation with a simple majority rather than a 60-vote super-majority, hard to reach given Democrats' opposition. Republicans hold a slim 52-48 margin in the Senate. The White House and congressional Republicans excluded Democrats as they developed the plan.

Independent analysts had forecast last month that corporations and the wealthiest Americans would benefit the most and many upper middle-income people would face higher taxes under the tax outline unveiled by the Republicans. The proposal would cut taxes for companies and individuals by up to US$6 trillion over the next decade, the analysts said.

REUTERS

A version of this article appeared in the print edition of The Straits Times on October 28, 2017, with the headline 'US House paves way for Trump tax cuts'. Print Edition | Subscribe