New law will allow US tax reforms without Democratic support

White House: this will ‘unleash potential of US economy through tax reform and tax cuts’

Former US president Barack Obama  campaigns with Virginia Democratic gubernatorial candidate Lt. Governor Ralph Northam. Photograph: Jim Lo Scalzo

Former US president Barack Obama campaigns with Virginia Democratic gubernatorial candidate Lt. Governor Ralph Northam. Photograph: Jim Lo Scalzo

 

The Trump administration’s plan to reform the US tax system has received a significant boost as the Senate passed a budget law that will allow Republicans to pass tax reform without the need for Democratic support.

In a closely-watched vote late on Thursday night in the Senate, lawmakers voted 51 to 49 for a budget resolution paving the way for $1.5 trillion in tax cuts over the next decade. It must now go to the House of Representatives, which has already passed its own budget Bill.

The vote in favour of the resolution now means that forthcoming legislation on tax reform can be passed with a simple majority in the 100-seat senate, rather than the “super-majority” of 60 votes sometimes needed. This means that Republicans, who hold 52 seats, are likely to be in a position to vote through new tax legislation without the need for any Democratic votes.

The White House immediately issued a statement after the vote, welcoming the resolution as creating a “pathway to unleash the potential of the American economy through tax reform and tax cuts, simplifying the overcomplicated tax code, providing financial relief for families across the country, and making American businesses globally competitive.”

Mr Trump tweeted on Friday morning: “This now allows for the passage of large scale Tax Cuts (and Reform), which will be the biggest in the history of our country!”

Intense negotiations

The vote followed intense negotiations between the White House and the Republican leadership on Capitol Hill. Trump met with six Republican members of the Senate finance committee on the eve of the vote to try to garner support.

But Senator Rand Paul, a fiscal conservative, did not vote in favour of the resolution despite being lobbied by Mr Trump to do so during a golf outing on Sunday. Nonetheless, last-minute support from Senator John McCain and Thad Cochrane, a Missouri senator who returned to the senate to vote, despite battling illness, ensured the resolution’s passage.

With the Republican-controlled Congress failing to make progress on reforming healthcare, pressure has increased on the party to agree a tax reform package by the end of the year or early 2018 at the latest.

US stocks jumped on the announcement of the vote, in anticipation of the long-promised tax reform package which Mr Trump has promised will be the “biggest tax cut we’ve ever had.” Among the changes being proposed are a reduction in the corporate tax rate from 35 per cent to 20 per cent.

Coded criticism

Meanwhile, a day after former president George W Bush delivered a coded criticism of the current US administration, former president Barack Obama appeared at a rally in Richmond Virginia to support the democratic candidate in the forthcoming Virginia governor election.

Speaking to crowds at his first election-style rally since he left the White House in January, Mr Obama decried the current state of politics which had become “so divided and so angry and so nasty”.

He urged democratic supporters not to be complacent. “This choice matters. The question is, will you show up to vote?” he said of the November 7th elections. “In off-year elections, Democrats sometimes…Y’all get a little sleepy. You get a little complacent. This is not my opinion. This is the data. It’s going to come down to how bad you want it,” he said.

In a speech on Thursday, Mr Bush launched a stinging attack on a political culture obsessed with “conspiracy theories and outright fabrication” and criticised “bullying and prejudice in our public life.”

Asked about Mr Bush’s remarks on Friday, White House press secretary Sarah Sanders said it was her understanding that his comments “were not directed towards the president.”