Tag Archives: Senate

Congress secures tax deal, Trump backs 21-percent corporate rate

Congress secures tax deal, Trump backs 21-percent corporate rate

By David Morgan and Amanda Becker

WASHINGTON (Reuters) – Congressional Republicans have reached a deal on final tax legislation, the U.S. Senate’s top Republican tax writer said on Wednesday, with President Donald Trump saying he would back a sharply lowered corporate tax rate of 21 percent.

The 21 percent rate would be slightly above a proposed 20-percent rate that Trump supported earlier, but still far below the present headline rate of 35 percent, a deep tax cut that U.S. corporations have been seeking for years.

As they finalized the biggest tax overhaul in 30 years, Republicans for weeks wavered on slashing the top income tax rate for the rich, but finally agreed to do it, despite Democrats’ criticism that the bill favors the wealthy and corporations, while offering little to the middle class.

The emerging congressional agreement includes a 21-percent corporate rate; a top individual income tax rate of 37 percent, down from the current 39.6 percent level; and a $10,000 cap on deducting state and local property or income tax payments, said sources familiar with the negotiations.

Although the president said a “final number” on the corporate rate had not been set, the Senate and House of Representatives were hurtling toward an agreement that would clear the way for final votes in both chambers next week.

“I think we’ve got a pretty good deal,” Senate Finance Committee Chairman Orrin Hatch told reporters as he prepared to join other Republicans for lunch with Trump.

Hatch’s remarks appeared to reinforce expectations that a final vote could begin in the Senate as early as Monday. Further details of the agreed legislation were not yet available.

Republicans have been urgently trying to finalize details of their bill without increasing its estimated impact on the federal deficit. As drafted, it is expected to add as much as $1.5 trillion to the $20-trillion national debt over 10 years.

At a tax event held by Democrats, Moody’s Analytics Chief Economist Mark Zandi said the Republican bill, if enacted, would cause interest rates to rise, meaning the benefits of a lower corporate tax rate would be “completely washed out.”

Stock markets have rallied for months in anticipation of lower taxes for businesses. The benchmark Dow Jones Industrial Average Index <.DJI> was up 0.5 percent at 24,628 in afternoon trading.

“The market is trading at all-time highs, its run-up has been really in anticipation of tax reform,” said Ken Polcari, NYSE floor division director at O’Neil Securities in New York.

CORKER UNDECIDED

Republican Senator Bob Corker, a fiscal hawk, on Wednesday said he was undecided on whether to support the bill. He told reporters: “My deficit concerns have not been alleviated.”

Asked at the lunch by reporters if he would sign a bill with a 21-percent corporate tax rate, Trump said: “I would … It’s very important for the country to get a vote next week.”

With their defeat on Tuesday in an Alabama special Senate election, Republicans were under increased pressure to complete their tax overhaul before Christmas and before a new Democratic Alabama senator can be formally seated in the Senate.

Democrat Doug Jones’ capture of the Alabama Senate seat came hours ahead of the final tax agreement being hammered out.

When Jones, who upset Republican Roy Moore in the deeply conservative Southern state, arrives in Washington, the Republicans’ already slim Senate majority will narrow to 51-49, further complicating Trump’s legislative agenda.

Fast action by Republicans on taxes would prevent Jones from upsetting the expected vote tallies on this bill since he will not likely be seated until late December or early January.

Senate Democratic Leader Chuck Schumer called on Republicans to delay a vote on overhauling the tax code for the first time in 30 years until Jones can be seated, but that was unlikely.

A one-percentage-point change in the corporate rate would give tax writers about $100 billion of revenues over a decade that could be used in many ways. One could be to repeal a federal tax on inheritances paid by wealthy Americans. Another might be to end the corporate alternative minimum tax.

Some Republicans also wanted a slightly higher corporate rate to pay for a higher child tax credit. Lawmakers had also debated capping a popular individual deduction for mortgage interest at $750,000 in home loan value, instead of $1 million.

If Trump can sign a tax bill by the end of the year, it would be the first major legislative victory for him and the Republicans since they took control of the White House and both chambers of Congress in January.

After his lunch with Republican lawmakers, Trump will speak on tax legislation alongside five middle class families who would benefit, senior administration officials said.

He wants to try to counter claims that the Republican tax plan would largely benefit corporations and the wealthy.

The nonpartisan Joint Committee on Taxation and Congressional Budget Office have both said wealthier taxpayers would gain disproportionately from the Republican proposals.

(Additional reporting by Jeff Mason, Steve Holland, Susan Cornwell, Richard Cowan, Makini Brice and Doina Chiacu; Editing by Kevin Drawbaugh and James Dalgleish)

Democrat Jones wins U.S. Senate seat in Alabama in blow to Trump

Democrat Jones wins U.S. Senate seat in Alabama in blow to Trump

By Rich McKay

BIRMINGHAM, Ala. (Reuters) – Democrat Doug Jones won a bitter fight for a U.S. Senate seat in deeply conservative Alabama on Tuesday, dealing a political blow to President Donald Trump in a race defined by sexual misconduct accusations against Republican candidate Roy Moore.

The stunning upset makes Jones the first Democrat elected to the U.S. Senate from Alabama in a quarter-century and will trim the Republicans’ already narrow Senate majority to 51-49, opening the door for Democrats to possibly retake the chamber in next year’s congressional elections.

Jones, who cast himself on the campaign trail as the candidate who could reach across the aisle and get things done in Washington, is expected to take office early in January, after the results are certified.

His election was not expected to affect pending votes in Congress on funding the government or overhauling the U.S. tax code, as Republican congressional leaders have vowed action on those bills before Christmas.

With 99 percent of the vote counted, Jones led by 1.5 percentage points over Moore, who refused to concede.

Alabama Secretary of State John Merrill said it was “highly unlikely” the outcome would change. “The people of Alabama have spoken,” he told CNN.

The ugly campaign drew national attention and split the Republican Party following accusations by several women that Moore sexually assaulted or pursued them when they were teens and he was in his 30s.

Moore, 70, a Christian conservative twice removed from the state Supreme Court in Alabama for ignoring federal law, denied the allegations and said he did not know any of the women involved.

Trump endorsed Moore even as other party leaders in Washington walked away. Jones, 63, a former federal prosecutor, portrayed the campaign as a referendum on decency and promised the state’s voters he would not embarrass them in Washington.

“I have always believed that the people of Alabama have more in common than divides us,” Jones told cheering supporters at his Birmingham victory party.

Trump, who congratulated Jones in a tweet late Tuesday night, on Wednesday tried to cast the win in a different light.

The president had joined establishment Republicans in the primary by backing Luther Strange, who filled the seat when Jeff Sessions left to serve as Trump’s attorney general. After Moore won the Republican nomination, Trump wholeheartedly endorsed Moore.

“The reason I originally endorsed Luther Strange (and his numbers went up mightily), is that I said Roy Moore will not be able to win the General Election. I was right! Roy worked hard but the deck was stacked against him!” Trump said on Twitter.

Network exit polls, however, showed Trump was not a factor in the decision for about half of Alabama voters.

“It had zero to do with Donald Trump,” Republican U.S. Representative Bradley Byrne of Alabama told MSNBC on Wednesday. The race was “a purely weird, unique election” not a harbinger of the 2018 midterm elections.

But U.S. Senator Chris Van Hollen, who heads the Democratic Senatorial Campaign Committee, called the victory in one of the most conservative states in the nation “a political earthquake.”

“You see voters who are fed up, and they want to send the message that they don’t like Trumpism,” Van Hollen said on MSNBC on Wednesday. “This was a big rejection of the ugly, divisive politics that Donald Trump has brought to the country.”

Former President Barack Obama, a Democrat, recorded robo-calls for Jones to help turn out African-Americans, who, according to network exit polls, constituted about 30 percent of those voting on Tuesday.

As a U.S. attorney Jones helped win the convictions in 2001 and 2002 of members of the Ku Klux Klan for the 1963 bombing of a Birmingham church that killed four little girls.

The sexual misconduct allegations against Moore came at a time when many powerful men, including Trump, have faced similar accusations.

John Laine, 65, a retired book editor from Birmingham who backed Jones, said he thought many Republicans crossed over and voted for a Democrat for the first time in their lives.

“The reason is that people just couldn’t stomach any more of Roy Moore,” he said.

(Additional reporting by Andy Sullivan in Montgomery, Ala.; Writing by John Whitesides; Editing by Richard Balmforth and Jeffrey Benkoe)

Senate poised for vote on tax bill negotiations with House

Senate poised for vote on tax bill negotiations with House

By David Morgan and Amanda Becker

WASHINGTON (Reuters) – A top U.S. Senate Republican voiced optimism that congressional negotiators will reach a deal on a sweeping tax overhaul ahead of a Dec. 22 deadline, as senators prepared to vote on Wednesday to authorize talks with the House to bridge differences between their rival bills.

The Republican-led House of Representatives and Senate must work out differences on issues ranging from business taxes to the repeal of the Obamacare mandate that Americans obtain health insurance or face a penalty before lawmakers can pass a final version.

A Senate measure to go to a conference with the House, which is widely expected to pass, follows similar House action this week. Senate aides said the vote would be held at 3 p.m. (2000 GMT).

John Cornyn, the No. 2 Senate Republican, said he was optimistic House and Senate tax negotiators would be able to work out an agreement before their self-imposed Dec. 22 deadline to send the bill to Republican President Donald Trump to sign into law.

“Given the similarities between the House and the Senate bills, I think there are some obvious targets where they need to focus their attention but obviously they won’t be rewriting the bills,” Cornyn said.

While there are significant differences between the House and Senate versions, both would deliver deep cuts in corporate income taxes and tax benefits to the wealthiest Americans as well as tax cuts to many middle-income people.

Passage of the tax bill would provide a badly needed legislative victory for Trump and Republicans after their failure earlier this year to enact legislation repealing President Barack Obama’s signature healthcare law.

Trump and Republicans see enacting the tax overhaul that they promised voters as crucial to their strategy for the 2018 U.S. congressional elections, when all 435 seats in the House of Representatives and 33 seats in the 100-member Senate will be up for election.

Democrats have been united against the bill, calling it a handout to corporations and the rich that would drive up the federal deficit.

Potential sticking points in the two versions of the legislation include the Senate’s decision to retain alternative minimum taxes for corporations and individuals. The House version repealed both taxes.

The bills also differ on their treatment of so-called pass-through enterprises including small businesses, the expensing of business capital investments, international corporate taxes, mortgage deductions and the child tax credit.

Republicans will also have to resolve a difference on the corporate income tax rate. Both chambers cut the rate to 20 percent from 35 percent, but the Senate’s bill delays the cut for a year.

The march toward passing tax legislation faced a risk earlier this week of becoming enmeshed in House Republican infighting over a separate spending measure. Members of the conservative House Freedom Caucus had threatened to vote against conference negotiations to gain leverage in the discussions with Republican leaders over the spending bill.

But House Freedom Caucus members have since vowed to insulate tax legislation from the politics of spending.

“We’ve got to get across the finish line on tax reform. Any distraction from that is a problem,” House Freedom Caucus Chairman Mark Meadows told reporters.

(Additional reporting by Richard Cowan; Editing by Caren Bohan and Will Dunham)

Fed interest rate hike expected next week, three hikes expected in 2018/poll

The Federal Reserve headquarters in Washington September 16 2015. REUTERS/Kevin Lamarque/File Photo

By Shrutee Sarkar

BENGALURU (Reuters) – The U.S. Federal Reserve is almost certain to raise interest rates later this month, according to a Reuters poll of economists, a majority of whom now expect three more rate rises next year compared with two when surveyed just weeks ago.

The results, from a survey taken just before the U.S. Senate voted to pass tax cuts that are expected to add about $1.4 trillion to the national debt over the next decade, show economists were already becoming more convinced that rates will need to go even higher.

While about 80 percent of economists surveyed in October said such tax cuts were not necessary, the passage of the bill, President Donald Trump’s first major legislative success, means the forecast risks have shifted toward higher rates, and faster.

The poll’s newly raised expectations for three rate rises next year are now in line with the Fed’s own projections. But they come despite a split among U.S. policymakers on the outlook for inflation, which has remained persistently low.

That is a similar challenge faced by other major central banks, who are generally turning away from easy monetary policy put in place since the financial crisis, looking through still-weak wage inflation and overall price pressures for now.

The core personal consumption expenditures price index (PCE), which excludes food and energy and is the Fed’s preferred inflation measure, has undershot the central bank’s 2 percent target for nearly 5-1/2 years.

The latest Reuters poll results suggest it is expected to average below 2 percent until 2019.

While the U.S. economy expanded in the third quarter at a 3.3 percent annualized rate, its fastest pace in three years, the latest Reuters poll – taken mostly before the release of that data – suggested that may be the best growth rate at least until the second half of 2019.

The most optimistic growth forecast at any point over the next year or so was 3.7 percent, well below the post-financial crisis peak of 5.6 percent in the fourth quarter of 2009.

Still, all the 103 economists polled, including 19 large banks that deal directly with the Fed, said the federal funds rate will go up again in December by 25 basis points, to 1.25-1.50 percent.

“This is about just getting back to a neutral level where monetary policy is neither encouraging growth or pushing against growth,” said Brett Ryan, senior U.S. economist at Deutsche Bank, which recently shifted its view to four rate rises next year.

“The Fed is still accommodative at the moment and we are still some ways away from the neutral fed funds rate which would in the Fed’s view be closer to 2.75 percent. The Fed can hike without slowing the economy.”

Financial markets are also pricing in over a 90 percent chance of a 25 basis-point hike in December, largely based on the falling unemployment rate and reasonably strong economic growth this year.

Asked what is the primary driver behind the Fed’s wish to raise rates further, over 40 percent of respondents said it was to tap down future inflation.

However, almost a third of economists said it is to gather enough ammunition to combat the next recession.

“At some point we are going to have a downturn and they (the Fed) are going to need to react and it is harder to do that when rates are closer to zero,” said Sam Bullard, an economist at Wells Fargo.

The remaining roughly 30 percent had varied responses, including some who said higher rates were needed to avoid risks to financial stability.

Over 90 percent of the 66 economists who answered another question said that the coming changes at the Fed – a new Fed Chair along with several new Fed Board members – will also not alter the current expected course of rate hikes.

“Both the rate tightening outlook and balance sheet reduction program will remain in place as the Fed officials fill open seats. Easing of financial regulation is likely the area that has the most forthcoming changes,” Bullard said.

 

(Additional reporting and polling by Khushboo Mittal and Mumal Rathore; Editing by Ross Finley and Hugh Lawson)

 

Senate approves major tax cuts in victory for Trump

Senate approves major tax cuts in victory for Trump

By David Morgan and Amanda Becker

WASHINGTON (Reuters) – The U.S. Senate narrowly approved a tax overhaul, moving Republicans and President Donald Trump a big step closer to their goal of slashing taxes for businesses and the rich while offering everyday Americans a mixed bag of changes.

In what would be the largest change to U.S. tax laws since the 1980s, Republicans want to add $1.4 trillion over 10 years to the $20 trillion national debt to finance changes that they say would further boost an already growing economy.

“We are one step closer to delivering MASSIVE tax cuts for working families across America,” Trump said in an early-morning tweet.

U.S. stock markets have rallied for months in the hope that Washington would provide significant tax cuts for corporations.

Celebrating their Senate victory, Republican leaders predicted the tax cuts would encourage U.S. companies to invest more and boost economic growth.

“We have an opportunity now to make America more competitive, to keep jobs from being shipped offshore and to provide substantial relief to the middle class,” said Mitch McConnell, the Republican leader in the Senate.

The Senate approved their bill in a 51-49 vote with Democrats complaining that last-minute amendments to win over skeptical Republicans were poorly drafted and vulnerable to being gamed later by lawyers and accountants in the tax avoidance industry.

“The Republicans have managed to take a bad bill and make it worse,” said Senate Democratic leader Chuck Schumer. “Under the cover of darkness and with the aid of haste, a flurry of last-minute changes will stuff even more money into the pockets of the wealthy and the biggest corporations.”

No Democrats voted for the bill, but they were unable to block it because Republicans hold a 52-48 Senate majority.

Talks will begin, likely next week, between the Senate and the House of Representatives, which has already approved its own tax bill.

Trump wants that to happen before the end of the year, allowing him and his Republicans to score their first major legislative achievement of 2017, despite controlling the White House, the Senate and the House since he took office in January.

Republicans failed in their efforts to repeal the Obamacare healthcare law over the summer and Trump’s presidency has been hit by White House in-fighting and by a federal investigation into possible collusion last year between his election campaign team and Russian officials.

The tax overhaul is seen by Trump and Republicans as crucial to their prospects at mid-term elections in November 2018, when they will have to defend their majorities in Congress.

In a legislative battle that moved so fast a final draft of the bill was unavailable to the public until just hours before the vote, Democrats slammed the proposed tax cuts as a give-away to businesses and the rich financed with billions of dollars in taxpayer debt.

The framework for both the Senate and House bills was developed in secret over a few months by a half-dozen Republican congressional leaders and Trump advisers, with little input from the party’s rank-and-file and none from Democrats.

Six Republican senators, who wanted and got last-minute amendments and whose votes had been in doubt, said on Friday they would back the bill and did so.

Senator Bob Corker, one of few remaining Republican fiscal hawks who pledged early on to oppose any bill that expanded the federal deficit, stood out as the lone Republican dissenter.

“I am not able to cast aside my fiscal concerns and vote for legislation that … could deepen the debt burden on future generations,” said Corker, who is not running for re-election.

KEY CHANGES

Numerous last-minute changes were made to the bill on Friday and in the early morning hours of Saturday.

One was to make state and local property tax deductible up to $10,000, mirroring the House bill. The Senate previously had proposed entirely ending state and local tax deductibility.

In another change, the alternative minimum tax (AMT), both for individuals and corporations, would not be repealed in full. Instead, the individual AMT would be adjusted and the corporate AMT would be maintained as is, lobbyists said.

Another change would put a five-year limit on letting businesses immediately write off the full value of new capital investments. That would phase out over four years starting in year six, rather than be permanent as initially proposed.

Under the bill, the corporate tax rate would be permanently slashed to 20 percent from 35 percent, while future foreign profits of U.S.-based firms would be largely exempted from tax — both changes pursued by corporate lobbyists for years.

On the individual side of the tax code, the top tax rate paid by the highest-income earners would be cut slightly.

The Tax Policy Center, a nonpartisan think tank, analyzed an earlier but broadly similar version of the bill passed by the Senate tax committee on Nov. 16 and found it would reduce taxes for all income groups in 2019 and 2025, with the largest average tax cuts going to the highest-income Americans.

Two Republican senators announced their support for the bill on Friday after winning more tax relief for non-corporate pass-through businesses. These include partnerships and other companies not organized as public corporations, ranging from mom-and-pop concerns to large financial and real estate groups.

The bill now features a 23 percent tax deduction for such business owners, up from the original 17.4 percent.

Democratic Senator Richard Blumenthal said Trump controls more than 500 pass-through companies that will directly benefit. “So the president may be celebrating, but most Americans will rue this day,” Blumenthal said.

The Senate bill would gut a section of Obamacare by repealing a fee paid by some Americans who do not buy health insurance, a step critics said would undermine the Obamacare system and raise insurance premiums for the sick and the old.

Senator Susan Collins, a moderate Republican, said she obtained commitments from Republican leaders that steps would be taken later in separate legislation to minimize the impact of the repeal of the “individual mandate” fee.

(Additional reporting by Susan Cornwell, Susan Heavey and Richard Cowan in Washington; Caroline Valetkevitch in New York; Editing by Kevin Drawbaugh, Kieran Murray and Alexander Smith)

Senate grapples with tax cut plan’s impact on federal deficit

Senate grapples with tax cut plan's impact on federal deficit

By David Morgan and Amanda Becker

WASHINGTON (Reuters) – U.S. Senate Republicans will grapple on Friday with the possibility of adding a tax increase to sweeping legislation meant to cut taxes on businesses and individuals, aiming to win support from fiscal conservatives worried about the bill’s impact on the federal deficit.

With a mandatory 20 hours of Senate debate nearing expiration, the Republican lawmakers, who control the chamber, could move to a final vote late in the day after a procedural vote starting at 11 a.m. EST (1600 GMT) and a potentially chaotic “vote-a-rama” on tax bill amendments offered by both Republicans and Democrats.

Republicans were still wrangling behind the scenes over how to raise $350 billion or more in taxes over 10 years to prevent their legislation from ballooning the federal deficit if the proposed cuts fail to generate the expected economic growth.

Senate Republican leader Mitch McConnell and others were also working on deals to win support from party members who want better tax breaks for non-corporate pass-through businesses, a bigger child tax credit for families, and a $10,000 deduction for state and local property taxes.

Despite the hurdles, rank-and-file Republicans were still optimistic that they could approve the bill this week and agree this month to final legislation with the House of Representatives, which their party also controls.

“This is the big enchilada,” said Senator Johnny Isakson of Georgia. “We’ve still got a chance to do something good, and I’m going to try and do it.”

Since taking office in January, President Donald Trump and the Republican-led Congress have passed no major legislation. Their bill would be the biggest overhaul of the U.S. tax system since the 1980s.

Success is crucial to Republican political prospects in the November 2018 elections, when the party will fight to keep control of the Senate and the House of Representatives.

But the effort stumbled on Thursday when Republicans acknowledged that Senate rules would not permit them to add a mechanism to trigger tax increases in coming years if the bill fails to boost the economy enough to generate sufficient revenues to pay for tax cuts.

Senator Bob Corker and other Republicans concerned about the deficit impact had demanded the trigger in exchange for their support. On Thursday, the nonpartisan Joint Committee on Taxation released a report saying the legislation would add $1 trillion to the deficit over the next 10 years, even with tax-driven economic growth projections factored in.

Republicans are now examining options that could raise taxes at a particular point over the next decade.

“We have an alternative, frankly a tax increase we don’t want to do, to try and address Senator Corker’s concerns,” said Senate Majority Whip John Cornyn, the chamber’s No. 2 Republican.

As drafted, the Senate bill would cut the U.S. corporate tax rate to 20 percent from 35 percent after a one-year delay and reduce the tax burden on businesses and individuals, while ending many tax breaks.

Analysts said lawmakers could scale back tax cuts for corporations and top individual earners.

Asked if lawmakers would have to accept smaller tax cuts, Senate Finance Committee Chairman Orrin Hatch said: “We’ll have to see.”

Early on Friday morning, Trump praised congressional Republicans’ work and blamed Democrats for trying to derail the bill, tweeting: “The Bill is getting better and better.”

Democrats have been united in their opposition to the bill, calling it a giveaway to the wealthy and corporations.

(Reporting by David Morgan and Amanda Becker; Additional reporting by Susan Heavey; Editing by Kevin Drawbaugh and Lisa Von Ahn)

Senate tax drama enters complicated end-game gambit

Senate tax drama enters complicated end-game gambit

By David Morgan

WASHINGTON (Reuters) – The Republican drive to push sweeping tax legislation through the U.S. Senate was hurtling on Thursday toward a dramatic conclusion, as Republican leaders pursued behind-the-scenes deals intended to secure enough votes for passage.

After an official 20 hours of debate, the Republican-controlled Senate was expected to begin a potentially chaotic “vote-a-rama” on amendments from Republicans and Democrats before moving to a final vote late on Thursday or early on Friday.

U.S. financial markets have rallied on optimism that the measure could pass, a sentiment shared by outside conservative groups that hope to see the first major overhaul of the U.S. tax code since 1986, when Republican Ronald Reagan was president.

“It’s the most unified effort I’ve seen on any issue in many years,” said Tim Phillips, president of Americans for Prosperity, a group aligned with billionaire industrialists Charles and David Koch.

A Republican push to overturn Obamacare ended in an humiliating failure in the Senate earlier this year, and President Donald Trump and his Republican allies have since been under mounting pressure to enact a package of tax cuts for businesses and individuals before January, giving them their first major legislative victory.

Republicans acknowledge that failure to pass a tax bill could jeopardize their control of the Senate and House of Representatives in next year’s congressional elections.

Democrats say the Republican tax plan is a giveaway to corporations and the wealthy at the expense of working Americans.

The House approved its own tax bill on Nov. 16. If passed this week, the Senate legislation would need to be reconciled with the House version before a final bill could be sent to Trump.

As an initial action on Thursday, Senate Republicans were expected to take a procedural vote that would formally replace the House bill with their own legislation.

While campaign donors are strongly behind the push for tax cuts, the American public is sharply divided.

Among Americans aware of the Republican tax plan, 49 percent

said they were opposed, up from 41 percent in October, according

to a Nov. 23-27 Reuters/Ipsos poll released on Wednesday. The

latest online poll of 1,257 adults found 29 percent supporting

the plan and 22 percent saying they “don’t know.”

KEEPING THEM GUESSING

Senate Republican leader Mitch McConnell did not appear to have enough votes to pass the legislation as the day began, with several Republican lawmakers keeping their colleagues guessing about where they would come down in the end.

Republicans have a 52-48 majority in the 100-member Senate,

giving them enough votes to approve the bill if they can hold

together. Without Democratic support, they can afford to

lose support from no more than two of their own members. Vice President Mike Pence would be able to break a 50-50 tie.

The Senate voted along party lines to begin the debate on Wednesday and later turned away a Democratic attempt to return the legislation to the tax-writing Senate Finance Committee for reconsideration.

But some Republicans have withheld their support for final passage as they press Republican leaders for changes that would prevent tax cuts from expanding the federal deficit, allow Americans a federal deduction for up to $10,000 in property taxes and give bigger tax breaks to so-called pass-through enterprises, including small businesses.

The Senate bill would cut the U.S. corporate tax rate to 20 percent from 35 percent after a one-year delay and reduce the tax burden on small businesses and individuals, while adding $1.4 trillion to a federal debt load that already surpasses $20 trillion.

Some Republicans want to lower the corporate tax rate to only 22 percent and forgo income tax cuts for the wealthiest Americans.

Democrats and independents have sought to persuade nonpartisan Senate officials to disqualify parts of the bill, including one to allow drilling in the Arctic National Wildlife Refuge, as impermissible under Senate rules, an aide said.

(Reporting by David Morgan; Editing by Peter Cooney)

Senate tax drama intensifies as bill faces key panel vote

Senate tax drama intensifies as bill faces key panel vote

By David Morgan

WASHINGTON (Reuters) – President Donald Trump’s drive for a big U.S. tax cut package headed toward a new drama on Tuesday in the Senate, where a pair of Republican lawmakers demanded changes in exchange for their help in moving the measure forward.

Trump was due to lobby Republicans at their weekly policy luncheon in the U.S. Capitol, with the Senate poised for a possible vote on tax legislation as early as Thursday.

The president has called on Republicans to deliver a tax bill to his desk before Christmas. The House of Representatives has already approved its version of the package, which would cut taxes for businesses and individuals.

But a Senate Budget Committee hearing on Tuesday, which Republican leaders have hoped will send legislation to a full Senate vote, has hit a potential hurdle with Republicans Ron Johnson and Bob Corker saying they may vote against the measure.

Their opposition could be the first major obstacle for the Republican tax overhaul in the Senate, where earlier this year political infighting prevented the party from overturning the Obamacare healthcare law.

Johnson and Corker both say they will back the tax cut package if their separate concerns are satisfied. Corker, a prominent fiscal hawk, wants a measure that would prevent the tax bill from causing the federal deficit to balloon. Johnson wants a better deal for so-called pass-through enterprises that include small businesses.

Senators were working “feverishly” to address concerns, Corker told CNBC on Tuesday morning.

“I know it’s important not just to me but numbers of members who want to make sure that if for some reason these projections are off – we don’t have the growth that’s been laid out, it doesn’t generate revenues – that we’re not passing on increased debt to future generations,” he said.

Two Republican “no” votes at the committee hearing would stall the effort, as Republicans control the 23-member committee by only one vote and no Democrats are expected to support the bill.

Republicans, who control both chambers of Congress and the White House, have yet to score a major legislative victory since Trump took office in January. After their failed push to repeal Obamacare, they are eager to score a win before next year’s midterm elections, when control of the House and the Senate is at stake.

TAX CUTS, DEFICIT RISES

The Senate bill would slash the corporate tax rate to 20 percent from 35 percent after a one-year delay. It would impose a one-time, cut-rate tax on corporations’ foreign profits, while exempting future foreign profits from U.S. taxation.

But it would also add more than $1.4 trillion to the federal deficit over the first decade, according to congressional analysis. Republicans have said that economic growth spurred by tax cuts would generate enough new tax revenue to eliminate any new deficit.

The nonpartisan Joint Committee on Taxation is not expected to release a full macroeconomic analysis of the tax bill head of a Senate vote.

As a result, Corker and other Republican deficit hawks, including Senator James Lankford, have been holding talks with Senate tax writers and the administration about adding a provision that would raise tax rates if revenues fall short of expectations.

Other lawmakers have expressed concern that the Senate bill could effectively raise, not cut, the amount of tax paid by some people because it would eliminate a popular federal income tax deduction for state and local tax payments. They are also concerned it could increase health insurance costs for people with medical conditions.

The Congressional Budget Office (CBO), another nonpartisan research unit of Congress, said the number of Americans with health insurance would fall by 13 million by 2027 under the Republican tax bill, which would repeal an Obamacare federal fine meant to encourage people to buy health insurance.

The CBO said this would make people with incomes below $30,000 net losers under the bill, and most of those earning more would be net winners, especially those with incomes between $100,000 and $500,000.

If the Senate manages to pass the tax bill, its version and the House version will have to be reconciled into a piece of legislation that both chambers must approve before it can be signed into law by Trump.

(Reporting by David Morgan; Additional reporting by Doina Chiacu and Andy Sullivan; Editing by Cynthia Osterman and Frances Kerry)

Senate Finance chairman revises tax plan to end Obamacare mandate

Senate Finance chairman revises tax plan to end Obamacare mandate

WASHINGTON (Reuters) – The head of the U.S. Senate Finance Committee proposed major changes to a Republican tax reform plan, adding a repeal of Obamacare’s health insurance mandate and making corporate tax cuts permanent while ending individual cuts in 2025.

In a statement late on Tuesday, committee chairman Orrin Hatch said the proposed changes would also slightly lower some individual tax rates and includes a repeal of the alternative minimum tax but only through 2025, when it would be reinstated.

The 226-page amendment comes as the Senate continues to craft its version of tax reform alongside the U.S. House of Representatives, which is finalizing its own bill. The two plans must be reconciled and merged into a final plan that can pass both chambers before it goes to President Donald Trump to sign into law.

Republicans, who control Congress and the White House but have yet to pass any major legislation, are eager for a legislative victory ahead of the 2018 midterm elections and are pushing hard to pass tax cuts by the end of the year.

It was not immediately clear how many of Hatch’s colleagues will support the plan in the Senate, where Republicans hold a slimmer 52-48 majority than in the House.

Democrats have dismissed the Republican plans as giveaways to corporations and the wealthy that would swell the nation’s deficit. If Democrats remain united in opposition, Republicans cannot lose more than two senators from their ranks and still have enough votes to pass tax legislation.

The inclusion of the healthcare provision, however, could add to the uncertainty, given that Republicans earlier this year failed to make good on their pledge to repeal and replace former President Barack Obama’s 2010 healthcare overhaul.

Hatch’s changes would end one of the more unpopular provisions in Obama’s Affordable Care Act that require Americans to obtain health insurance or pay a penalty. The nonpartisan Congressional Budget Office estimated that the change would increase the number of uninsured by 13 million people by 2027.

“By scrapping this unpopular tax from an unworkable law, we not only ease the financial burdens already associated with the mandate, but also generate additional revenue to provide more tax relief to these individuals,” Hatch said in a statement.

But several key moderate Republicans, including Senators Susan Collins and John McCain, expressed uncertainty on Tuesday over tying the tax bill to the healthcare provision details.

Hatch’s plan would also expand access to deductions for so-called “pass-through” businesses and increase the child tax credit to $2,000 from the earlier proposed $1,650, Hatch said. The current tax credit for children is $1,000.

(Reporting by David Alexander; Editing by Jeffrey Benkoe)

Senate panel advances crackdown on online sex trafficking

Senate panel advances crackdown on online sex trafficking

By Dustin Volz

WASHINGTON (Reuters) – A U.S. Senate committee on Wednesday advanced legislation to make it easier to penalize operators of websites that facilitate online sex trafficking, the most concrete action from Congress this year to tighten regulation of internet companies.

The approval came after major U.S. internet firms dropped their opposition to the measure, which amends a decades-old law that is considered a bedrock legal shield for the companies.

In a unanimous voice vote, the Senate Commerce Committee passed a measure that gives states and sex-trafficking victims a means to sue social media networks, advertisers and others that fail to keep exploitative material off their platforms.

The bill rewrites Section 230 of the Communications Decency Act, which generally protects companies from liability for the activities of their users. The changes, which have bipartisan support, will still need to pass the full Senate and the U.S. House of Representatives and be signed by President Donald Trump to become law.

“This is a momentous day in our fight to hold online sex traffickers accountable and help give trafficking survivors the justice they deserve,” Republican Senator Rob Portman, who co-authored the bill, known as the Stop Enabling Sex Traffickers Act, said in a statement.

After decades of little oversight from Washington, the internet industry is facing increased scrutiny from lawmakers in both parties over concerns about their size and how their platforms were used by Russia during the 2016 election.

More than 40 senators have co-sponsored the bill, and Trump’s daughter, Ivanka Trump, has endorsed it.

“Great to see the public & private sector come together in support of this bipartisan legislation to stop sex trafficking online,” she tweeted on Wednesday.

Internet firms had long objected to proposals in Congress to rewrite Section 230, arguing the measure had allowed innovation in Silicon Valley to thrive.

But the Internet Association, a major industry group whose members include Facebook <FB.O>, Amazon <AMZN.O> and Alphabet’s Google <GOOGL.O>, announced support for the Senate bill last week after a series of changes.

Those edits clarified that criminal charges are based on violations of federal human trafficking law and that a standard for liability requires a website to “knowingly” assist in facilitating trafficking.

Some opposition remains. In a letter on Tuesday, a dozen civil liberties organizations, including the Center for Democracy & Technology and Electronic Frontier Foundation, said the bill would threaten free speech online and unevenly harm smaller companies with fewer resources to police their platforms.

(Reporting by Dustin Volz; Editing by Colleen Jenkins)