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Trump’s tax bill: US Senate passes reform legislation

Added on 25 December 2017 - 1:51 'Viewed 53 views times.

Analysis: One final swoop

By Anthony Zurcher, BBC North America reporter

It wasn’t exactly easy, but President Trump now has his signature legislative achievement. The self-styled dealmaker-in-chief was finally able to flex his party’s majority muscle, overcoming internal dissent to accomplish some long-sought political goals.

Subject to a vote in the House early on Wednesday, Republicans have reduced taxes by more than $1.4 trillion (£1tn) over 10 years, including significant changes to the corporate tax structure.

Congressional conservatives also opened the Arctic National Wildlife Refuge to oil drilling – a pitched partisan battle for years. And it set a bomb at the heart of Obamacare by ending the tax penalty for those who don’t have medical insurance starting in 2019.

Image copyright Getty Images Image caption Vice-President Mike Pence announced the result

What one Congress can do another can undo, of course, and the task ahead for Republicans is selling a sceptical public on the benefits of their plan.

While they may argue that Americans will come around once they see lower tax bills, many may have already made up their mind.

Like Obamacare eight years ago, this tax legislation was passed by partisan muscle alone. And like that law, many Americans view the legislation as largely benefitting others. They will be difficult to convince otherwise.

Repealing key provisions of this tax law will be as uniting for Democrats as healthcare repeal was for conservatives.

Donald Trump and Republicans have their victories. They will have to fight to keep them.

How is the rest of the world affected?

The predicted boost for business has caused the stock market to soar in recent weeks. US economic growth is also expected to have a knock-on effect around the world.

As a result of the reforms, US companies with offshore dealings could decide to keep their money at home, enticed by lower corporation taxes plus a desire to avoid new restrictions on shifting profits abroad.

Trump’s tax cuts: Why they matter further afield

Companies operating overseas, such as big tech and pharma companies, would be taxed at a low rate – 15.5% – to return the cash to the US in a one-time move.

Ireland, where Apple has a major base, still undercuts the US with its headline corporation tax rate of 12.5%.

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