Republicans in the US Congress hit a last-minute snag on Tuesday in their drive to approve the biggest tax code rewrite in 30 years, delaying what would be their first major legislative win during Donald Trump's presidency.
The Republican-controlled House of Representatives passed the tax package on Tuesday afternoon, sending the bill to the Senate.
However, a Senate staff official then ruled that three provisions of the House bill did not comply with the Senate’s complex rules, Independent Senator Bernie Sanders said.
The plan was for the Senate to delete the three offending provisions and vote on the bill again on Wednesday. If approved, which is widely expected, the bill would then be sent back to the House for another vote on Wednesday.
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The provisions in question deal with using educational savings accounts for home schooling and with private university endowments.
The Senate parliamentarian’s ruling against the provisions threw a spanner into what would have been a day of celebration for Republicans.
The bill includes steep tax cuts for corporations and wealthy taxpayers and a revamp of how the United States taxes multinational companies, as well as a tax deduction for the owners of "pass-through" businesses, ranging from independent family-owned stores to large real estate and financial enterprises.
It offers temporary tax rate cuts for some individuals and families. Middle-income households would see an average tax cut of $900 (€760) next year, while the wealthiest one per cent of Americans would see an average cut of $51,000 (€43,000), according to the nonpartisan Tax Policy Center, a think tank in Washington.
As treasury secretary Steven Mnuchin looked on from the gallery, the House passed the bill by a vote of 227 to 203, overcoming united opposition from Democrats, who criticised the bill as a giveaway to corporations and the wealthy.
Twelve Republicans voted against it, including 11 from New York, California and New Jersey, all high-tax states where better-off homeowners could be hurt by the bill’s new limits on deducting state and local taxes.
Republicans insist the package will boost the economy and job growth. They also see the measure as key to retaining their majorities in the House and Senate in elections next November.
"Today, we give the people of this country their money back. This is their money, after all," House speaker Paul Ryan said shortly before the vote.
Mr Ryan was interrupted twice by protesters. “You’re lying!” one woman shouted.
Democrats say the bill will widen the income gap between rich and poor Americans, while adding $1.5 trillion over the next 10 years to the mounting $20 trillion US national debt.
House Democratic leader Nancy Pelosi called the bill a "Frankenstein monster" riddled with carve-outs and loopholes that falls far short of the Republican promise of simplifying the tax code. "This monster will come back to haunt them," she said on the House floor.
Some 52 per cent of adults in the US oppose the tax plan, while 27 per cent support it, according to Reuters/Ipsos polling.
Republicans control the 100-seat Senate by only a 52-48 margin and can afford to lose support from no more than two party lawmakers. Republican senator Jeff Flake was still undecided yesterday. Senator John McCain, who has brain cancer, was spending time with family in Arizona.
Vice president Mike Pence took the precaution of rescheduling a trip to Egypt and Israel for January so he would be on hand this week in case his tie-breaking voting power is needed to ensure Senate passage of the bill. – Reuters