US Congress braces for tax overhaul, as hurdles remain

WASHINGTON: US Republicans on Wednesday will roll out the Donald Trump-backed tax overhaul, which received a Halloween push from congressional leadership warning against letting Democratic "hocus pocus" distract from the effort.
Trump wants lawmakers to pass the plan, which allows for some US$1.5 trillion (RM6.4 trillion) in tax cuts, by the end of the year to salvage a key plank of his 2017 agenda.
That is lightning speed for a mammoth bill that has been crafted in secrecy, and is being unveiled in Nov just weeks before Congress goes on holiday.
And its fate – not to mention its details – remains uncertain, as it risks running afoul of fiscal conservative lawmakers intent on not adding to the deficit.
Hoping to turn attention from recent bombshell indictments and guilty pleas from Trump campaign associates in the investigation about Russia's interference in the US election, Trump weighed in Tuesday ahead of the tax plan's release.
"I hope people will start to focus on our Massive Tax Cuts for Business (jobs) and the Middle Class," Trump tweeted.
The Republican intention to slash tax rates has been forecast to add more than US$5 trillion to the debt over a decade. But with the Republican budget passed last week setting a US$1.5 trillion cap, tax writers must find ways to offset the costs.
The plan's basic outline is a drop in the corporate tax rate from 35 to 20%, a reduction in income tax for the majority of income groups, and the elimination of loopholes and deductions to fix a tax code which Trump calls a "relic."
Democrats have assailed the plan, with Senate Minority Leader Chuck Schumer calling it "a huge tax cut for the top 1%."
House Speaker Paul Ryan, embracing the fright-night theme of Halloween, issued a statement urging lawmakers to act.
"Don't be spooked, and let's get this done," Ryan said, as he blasted "special interest ghouls" and Democratic scare tactics.
"They will cast us as bogeymen and attempt to distract us with Hocus Pocus."
The overhaul, Ryan insisted, "will also give everyday hardworking families a monster pay raise – witches very good news."
Tax writers have struggled to find the sweet spot that will lower taxes for most Americans and spur economic growth while not ballooning the debt.
They have considered curbing 401(k) US retirement plans as a way to pay for the cuts. But last week Trump inserted himself into the debate, warning lawmakers against tampering with the popular tax-deferred plans.
Another proposal involves limiting several local and state deductions, but that has antagonised Republicans in high-tax states like New York, New Jersey and California who warned the move would hurt their constituents. — AFP