Principles at the door

2 December 2017 By Gina Chon Follow @GinaChon

Senate Republicans passed a tax cut plan after last-minute changes papering over deficit concerns and the bill’s tilt to the wealthy. Differences with the House must be reconciled. But an escalating Russian influence probe makes the party even more frantic to claim a victory.

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Republicans in the U.S. Senate on Dec. 2 approved a tax-cut plan that would reduce the corporate rate from 35 percent to 20 percent, and at least temporarily reduce levies on individual income. The bill included several changes to win over members concerned about the deficit, including raising tax rates on repatriated corporate profits to 14.5 percent for liquid assets from an originally proposed 10 percent, and to 7.5 percent for illiquid assets from 5 percent. That is slightly higher than rates in a House of Representatives proposal. The Senate plan will also revise the alternative minimum tax for individuals and retain a similar levy for corporations, which are repealed in the House bill.

Senator Susan Collins also won a concession to retain a tax deduction for state and local property taxes, capped at $10,000, which is similar to the House plan. All other state and local deductions are repealed, as it is in the House plan. The Joint Committee on Taxation said on Nov. 30 that under dynamic scoring, which takes into account the growth effects of tax cuts, the Senate bill would add $1 trillion to the deficit over a decade.

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