President Donald Trump has defended a Republican tax-cut plan against Democratic charges that it favors the rich, saying it will be ‘one of the great Christmas gifts’ for the middle class with just days to go before Congress votes.
With a vote on the biggest tax rewrite in three decades set for Tuesday, Republicans were working to ensure party members were holding the line in favor of the legislation against entrenched Democratic opposition.
The plan was finalized on Friday after Republican Senators Marco Rubio and Bob Corker pledged their support.
Donald Trump, pictured at a rally in Florida in front of a Christmas-themed backdrop, defended the Republican tax plan over the weekend. He said: ‘It’s going to be one of the great Christmas gifts to middle-income people’
One of Trump’s pledges has been to ‘say Merry Christmas again’ in a departure from his predecessor, Barack Obama, who often used the word ‘holidays’ or phrase ‘holiday season’ in place of ‘Christmas’ (stock photo of Christmas presents at right)
Three Republican senators, enough to defeat the measure in a Senate that Trump’s party controls with a slim 52-48 majority, remained uncommitted: Susan Collins, Jeff Flake and Mike Lee.
Passage in Congress would provide Republicans and Trump with their first major victory since he took office in January.
‘It’s going to be one of the great Christmas gifts to middle-income people,’ Trump told reporters at the White House on Saturday before he boarded a helicopter for meetings at Camp David.
‘The Democrats have their sound bite, the standard sound bite before they even know what the bill is all about,’ he added.
Trump also touted the nation’s economy, predicting that it would ‘start to rock’ once the bill is passed.
Trump also predicted that economic growth could go from the current 3 percent to ‘4, 5 and maybe even 6 percent ultimately.’
The proposed package would slash the U.S. corporate tax rate to 21 percent and cut taxes for wealthy Americans.
Many economists doubt that even a sustained 4 percent growth rate is achievable.
Speaker of the House Paul Ryan (left), a Wisconsin Republican, and Senate Majority leader Mitch McConnell (right) have signaled they are confident they can pass tax reform legislation before Christmas
Republicans seem to have secured the votes to pass a tax overhaul that Trump hopes to sign before Christmas.
‘This is happening. Tax reform under Republican control of Washington is happening,’ House Speaker Paul Ryan told reporters over the weekend.
Under an agreement between the House of Representatives and the Senate, the corporate tax would be 1 percentage point higher than the 20 percent rate earlier proposed, but still far below the current headline rate of 35 percent, a deep tax reduction that corporations have sought for years.
It is expected to add $1.46trillion to the nation’s debt over a decade.
Democrats have slammed the plan as a giveaway to corporations and the rich that would drive up the federal deficit.
For months, Trump has touted the bill as a middle-class tax cut.
Studies from independent analysts and non-partisan congressional researchers have projected that corporations and the rich would benefit disproportionately.
Trump repeated on Saturday that the tax overhaul would help bring in $4trillion in foreign profits from U.S. companies.
The tax plan proposes new rules for repatriating cash held overseas.
‘This is going to bring money in. As an example, we think $4trillion is going to be flowing back into the country,’ he said. ‘That’s money that’s overseas that’s stuck there for years and years.’
Senate Minority Leader Chuck Schumer (L), a New York Democrat,and House Minority Leader Nancy Pelosi, a California Democrat, say the bill is a gift to corporate interests as Democrats are unanimously opposed to the legislation
The Tax Cuts and Jobs Act creates seven new tax brackets, including a 37 per cent rate – down from 39.6 per cent – for top-end wage earners.
The new rates start at 10 per cent and rise to 12, 22, 24, 32, 35 and 37 per cent.
The bill also lowers the top corporate tax rate from 35 per cent to 21 per cent, the largest such reduction in U.S. history.
It makes changes to the income levels where the tax rates would kick in, raising the top tier by about $30,000 so only those earning $500,000 or more would be in the top bracket.
A change to the deductibility of mortgage interest will limit it to the first $750,000 of new home loans.
And Americans who inherit property won’t have to pay estate taxes on the first $11.2million. That’s double the current exemption.
Some tax breaks that were written out of early versions of the bill are back in.
Those include a deduction for medical expenses and an exemption for graduate school tuition waivers. Americans paying off student loans will still be able to deduct the interest.
A promised $10,000 deduction for income and property taxes paid to states, counties and cities is also included – a compromise that attracted the support of lawmakers from high-tax states like New York and California.
Trump touted the nation’s economy, predicting that it would ‘start to rock’ once the bill is passed. Pictured is a trader at the New York Stock Exchange
The bill also eliminates the tax penalty placed on Americans who don’t buy medical insurance required by Barack Obama’s Affordable Care Act. Pictured are two people shopping for insurance under the Obama act
The bill includes an expanded child tax credit, a move calculated to win the support of last-minute holdout Marco Rubio, a Florida Republican senator.
It also eliminates the tax penalty placed on Americans who don’t buy medical insurance required by Barack Obama’s Affordable Care Act.
The nonpartisan Congressional Budget Office has cautioned that this may lead to more Americans not buying insurance policies, which could then contribute to premium-hikes for those who do.
The White House said in a statement that ‘[b]y lowering tax rates, simplifying the rigged and burdensome tax code, and repealing the failed tax on lower- and middle-income households known as the Obamacare individual mandate, this legislation will grow our economy, raise wages, and promote economic competitiveness’.
The bill includes an expanded child tax credit, a move calculated to win the support of last-minute holdout Marco Rubio (pictured)
Democrats were predictably sour on the legislation.
California Senator Dianne Feinstein called the bill ‘awful’ and ‘one of the most irresponsible I’ve seen’.
‘In addition to driving up the deficit, it will increase health care premiums in the individual market by 10 percent each year, leave 13 million more Americans without health insurance and threaten to destroy a pristine section of the Alaskan wilderness.
‘I’m surprised anyone can call this a tax reform bill with a straight face,’ she said. ‘This is nothing more than a huge tax cut for big corporations and the rich, paid for by the middle class.’
Under the plan, however, Americans claiming the standard deduction instead of itemizing will have the benefit of a deduction that’s nearly doubled.
Republicans say that will result in millions of Americans filing a single-page tax return.
The final per-child tax credit will give families making up to $400,000 a year a $2,000 benefit per child.
Trump has repeatedly broken with his predecessor Barack Obama over his insistence on using the word ‘Christmas’ as opposed to ‘holidays,’ which the 44th president used.
In November, the Trump family debuted their holiday card, which wishes Americans a Merry Christmas and a Happy New Year, instead of Happy Holidays.
Last year’s card sent out by President Obama wished Americans a ‘joyous holiday season’.
The card and the ‘Christmas gift’ comment are in keeping with Trump’s campaign pledge to ‘say Merry Christmas again’.
He repeated the pledge most recently in October at the Voter Values Summit when he said: ‘They don’t use the word “Christmas” because it’s not politically correct.’