The tax-cut strategy calls for a reduction of corporate taxes from its existing 35% down to 20%.
In a significant development, U.S President Donald Trump’s push to overhaul the U.S. tax code cleared a significantly hurdle with the Senate approving a blueprint for the budget of fiscal year 2018.
The development will pave the way for Republicans to pursue a tax-cut strategy which will not need the support of Democrats.
The Republican-controlled Senate approved the measure by a vote of 51-to-49; the tax cus proposals will add to the $1.5 trillion federal deficit over the next decade.
“Now with this budget, we’re on a path to deliver much-needed relief to American individuals and families who have borne the burden of an unfair tax code,” said Senate Majority Leader Mitch McConnell said after rh measure was passed.
Democrats are likely to vote against the tax plan which has promised to deliver $6 trillion in tax cuts for businesses and individuals.
“This is not a bad budget bill, it is a horrific budget bill,” said Senator Bernie Sanders, an independent who ran for the 2016 Democratic presidential nomination.
“At a time of massive income inequality, this budget provides $1.9 trillion in tax breaks for the top 1 percent.”
Incidentally, the resolution has to be reconciled with a markedly different version passed by the House of Representatives, where Republicans say negotiations on a unified measure could take up to two weeks.
The House budget resolution has called for a revenue-neutral tax bill and aims to combine tax cuts in the same legislation as the $203 billion in spending cuts to mandatory programs including food assistance for the poor.
The Senate version instructs the Energy and Natural Resources Committee to save at least $1 billion over the next decade.
Significantly, the Senate measure also contains a legislative tool known as reconciliation, which will enable Republicans, who control the 100-seat Senate by a 52-48 margin, to push through tax legislation through the Senate on a simple majority vote. In the absence of this tool, the tax reform will need 60 votes and would most likely fail.
Despite the fact that vote from Democrats will not be required to pass this tax legislation, U.S. President Donald Trump has sought the support of six Senate Democrats, five of whom are up for reelection next year in the states in which Trump won in the 2016 election.
The White House’s view on the matter is that the slashing of the corporate tax rate from 35% to 20% will create and boost blue collar jobs.
As per Senator Ron Wyden, the top Democrat on the tax-writing Finance Committee, who attended the White House meeting, Trump’s tax plan will raise taxes for middle-class Americans, will benefit the wealthy, and increase the federal deficit.