The Senate passed its tax reform legislation on Saturday morning at 1:49 a.m., on a vote of 51-49. The bill lowered the corporate tax rate to 20 percent – a significant drop from its current 35 percent rate.
Vice President Mike Pence was standing by, but his vote turned out to be not necessary. All of the 52 Republican senators supported the measure except for Tennessee Sen. Bob Corker. He objected to the anticipate increase upon the country’s deficit.
A lower corporate tax rate has been strongly championed by President Donald Trump, and the Senate’s passage of the measure marks his first significant legislative victory.
Although the original impetus behind the measure was to keep taxes “revenue neutral,” the Congressional Budget Office “scored” the bill as adding $1.4467 trillion to the deficit over the next decade.
Nearly united front of Republicans supported changes to corporate and individual tax rates
After passage of the legislation, Senate Majority Leader Mitch McConnell exulted in the victory, declaring that “there was not a single Democrat who thought this was a good idea.” He said that tax reform would likely be an issue in the 2018 congressional elections.
Asked whether the tax measure would be revenue neutral in light of the $1.4 trillion addition to the deficit, McConnell said that it would. After the stimulative effects on the economy were considered, McConnell said, the measure would cut down on the deficit.
“The economy only needs to grow 0.4 percent of one percent over the next 10 years,” to become revenue-positive. “This is going to get everyone moving,” said McConnell of the bill’s likely impact on the economy.
Also on hand to celebrate was Senate Finance Committee Chairman Orrin Hatch, R-Utah, one of the few senators who was also serving at the time of the last major overhaul of the tax code, in 1986.
Sen. Lisa Murkowski, R-Alaska, joined in her support for the package because of a five-page Title II, which was devoted to allowing oil exploration within the Arctic National Wildlife Reserve. “We have been trying to open up [the reserve] to responsible oil and gas production for 40 years now.”
Individual health care mandate lifted
Additionally, the measure eliminates the mandate requiring individuals to purchase health-care insurance. The mandate was at the heart of President Barack Obama’s Affordable Care Act.
The House of Representatives has already passed a tax reform measure, and the Senate-passed version must now either go to a conference committee, or be passed in its exact form by the House.
The corporate rate is lowered to 20 percent under both the House and Senate measures. There are four personal income taxes brackets under the House version, topping off at 39.6 percent in the House bill, and 38.5 percent in the Senate version.
Both versions expand exemption from the estate tax to about $11 million a person. Both versions nearly double the standard deduction, but also eliminate the personal exemption. A change in the child tax deduction in the Senate raised that level to $2,000 per child, above the $1,600 per child in the House measure.
(Senate Majority Leader Mitch McConnell of Kentucky walks from the Senate chamber to his office December 1, 2017, at the Capitol. The passed the tax reform bill early on December 2. Photo by Alex Wong/Getty Images.)