Calculator and Dollars

US Senate approves tax reform bill that will cut corporation tax from 35% to 21%

Written by Joseph Nordqvist

Published: 18:04, December 20, 2017

The US Senate approved a sweeping new tax reform bill set to overhaul the country’s tax system, slashing tax rates for corporations from 35% to 21% and forecast to reduce taxes by more than $1.4 trillion (£1tn) over 10 years.

The Senate voted 51-48 in favor of the bill.

After it was found that three procedural rules had been violated, the bill will go back to the Republican-majority House of Representatives on Wednesday for final approval before being signed into law by President Trump.

Vice-President Mike Pence, who presided over the Senate chamber, announced the result.

“On this vote, the ayes are 51, the nays are 48. The Tax Cuts and Jobs Act is passed,” he said.

Shortly after the vote, Trump tweeted:

“The United States Senate just passed the biggest in history Tax Cut and Reform Bill. Terrible Individual Mandate (ObamaCare)Repealed. Goes to the House tomorrow morning for final vote. If approved, there will be a News Conference at The White House at approximately 1:00 P.M.”

The tax reform will particularly benefit US businesses – especially multinational corporations.

Amongst individual taxpayers, those who expected to reap the biggest benefits from the bill are the extremely wealthy, while the country’s middle class are expected to benefit significantly less.

Tax Policy Center, a think tank in Washington, found that the largest cuts as a share of income will go to taxpayers in the 95th to 99th percentiles of the income distribution. The think tank estimates that middle-income households can expect to pay $900 less tax next year under the bill, while the country’s top 1 percent of can expect to see an average cut of $51,000.

Democratic Senator Chris Van Hollen was quoted by Reuters as saying that the bill “will harm millions of middle-class families … It contains huge, permanent giveaways for big banks and corporations, and asks our children, millions of working Americans and senior citizens, and future generations to pay the price.”

Senate Republican leader Mitch McConnell said:

“We’ve had two quarters in a row of 3 percent growth.

“The stock market is up. Optimism is high. Coupled with this tax reform, America is ready to start performing as it should have for a number of years.”

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