Republicans finalized the most sweeping overhaul of the nation’s tax laws in three decades on Friday, changing the child tax credit to placate a reluctant GOP senator as they pushed to muscle the bill through Congress next week and give President Donald Trump his first major legislative victory.

Sen. Marco Rubio, R-Fla., had been holding out for a bigger child tax credit for low-income families. After he got it, Rubio tweeted that the change is “a solid step toward broader reforms which are both Pro-Growth and Pro-Worker.”

Rubio spokeswoman Olivia Perez-Cubas said that meant he’d vote yes. Rubio’s support provided a major boost for Senate Republicans who are trying to hold together a razor-thin majority to pass the bill.

Read: U.S. tax bill could distort trade, EU leaders warn

“I’m confident we’ll have the votes,” said Sen. Rob Portman of Ohio, one of the Republican negotiators on the bill.

Portman cast the bill as providing “the kind of middle-class tax relief that’s desperately needed right now. People are looking at flat wages and higher expenses, and this will help.”

Members of a House-Senate conference committee signed the final version of the legislation Friday, sending it to the House and Senate for final passage. They have been working to blend different versions passed by the two houses.

The tax package would double the basic per-child tax credit from US$1,000 to US$2,000. The bill makes a smaller amount available to families even if they owe no income tax. Rep. Kristi Noem, R-S.D., said Friday that that amount had been increased to US$1,400.

Rubio had said he wanted the earlier US$1,100 figure increased.

Low-income taxpayers would receive the money in the form of a tax refund, which is why it’s called a “refundable” tax credit.

Senate Republicans passed their original tax bill by a vote of 51-49—with Rubio’s support. If they lost Rubio, they would have been one more defection away from defeat.

Rubio’s support came after a key faction of House Republicans came out in favour of the bill, increasing its chances. Members of the conservative House Freedom Caucus predicted the vast majority of their members would support the package.

Read: What’s more important for equities than U.S. tax reform

House and Senate Republican leaders on Wednesday forged an agreement in principle on the most sweeping overhaul of the nation’s tax laws in more than 30 years. The package would give generous tax cuts to corporations and the wealthiest Americans—Trump among them—and more modest tax cuts to low- and middle-income families.

“I’m confident that at the end of the day, the Senate will approve this conference committee report because no one should be defending the status quo in this horrible tax code Americans have had to live with for too long,” said Rep. Kevin Brady of Texas, a top House negotiator.

The details

The tax legislation would cut the top tax rate for the wealthiest Americans from 39.6% to 37%.

The package would nearly double the standard deduction, to US$24,000 for married couples. But it would scale back the deduction for state and local taxes, allowing families to deduct only up to a total of US$10,000 in property and income taxes. The deduction is especially important to residents of high-tax states such as New York, New Jersey and California.

The final package also slashes the corporate rate from 35% to 21%, a big win for corporate America. Business owners who report business income on their personal tax returns would be able to deduct 20% of that income.

Read: How U.S. tax reform threatens Canadian corporates

The agreement also calls for repealing the mandate under the so-called Obamacare health law that requires most Americans to get health insurance, a step toward the ultimate GOP goal of unraveling the law.

The business tax cuts would be permanent, but reductions for individuals would expire in 2026—saving money to comply with Senate budget rules. In all, the bill would cut taxes by about US$1.5 trillion over the next 10 years, adding billions to the nation’s mounting debt.

Rubio’s opposition had come at a bad time for Senate Republicans, with two of them missing votes this week because of illness.

John McCain of Arizona, who is 81, is at a Washington-area military hospital being treated for the side effects of brain cancer treatment, and 80-year-old Thad Cochran of Mississippi had a non-melanoma lesion removed from his nose earlier this week. GOP leaders are hopeful they will be available next week.

Originally published on
Add a comment

Have your say on this topic! Comments are moderated and may be edited or removed by
site admin as per our Comment Policy. Thanks!