Trump tax overhaul adopted by US House, debate shifts to Senate

[WASHINGTON] US House Republicans delivered a first-step victory on Thursday to President Donald Trump by passing a landmark tax overhaul, but the debate now shifts to the Senate, where a narrower path to success awaits.

Mr Trump had rallied his party footsoldiers barely an hour earlier in the US Capitol, leaning on them to advance the sweeping tax cuts for corporations and individuals as he seeks to lock down a first major legislative win by year's end.

The House of Representatives voted 227 to 205 to pass the legislation, after Mr Trump addressed Republican members in person and urged them to get the measure over the finish line.

Mr Trump, in a tweet, congratulated the House for taking "a big step toward fulfilling our promise to deliver historic TAX CUTS for the American people by the end of the year." The bill's success also marked a key victory for House Speaker Paul Ryan, who has struggled to get Trump's agenda through Congress.

Mr Ryan reiterated his assertion that in the first year the cuts will save US$1,182 for a typical family of four earning US$59,000.

The overhaul is "about tax relief, it's about fairness, it's about simplicity, it's about easing the stress and anxiety in this country," Mr Ryan said.

It was also clearly about checking a key box that had been a prominent campaign pledge, after Mr Trump and his Republicans failed on several attempts to repeal president Barack Obama's health care law.

House Republican Don Bacon told reporters that Mr Trump saw Thursday's vote as a "do-or-die" effort.

"Hey, you got a chance to be mediocre or to be great. Today's your chance to get it right," Mr Trump told the Republicans, according to Mr Bacon.

Several lawmakers burst into applause on the House floor when the bill passed, despite concerns by some Republicans in high-tax states like New Jersey that their constituents could end up paying more to Uncle Sam.

Thirteen Republicans voted against the legislation. No Democrats supported it.

With the first major hurdle cleared, conservative congressman Dave Brat said Trump's role will be as messenger in chief.

"We just want him to sell it to America," Mr Brat said.

The overhaul is a dicier proposition in the Senate, where Republicans hold a two-seat majority, 52-48.

Ron Johnson became the first Senate Republican to publicly oppose the measure, warning that it hands major tax breaks to corporations while treating other businesses differently.

"I'm not going to vote for this tax package," Mr Johnson told the Wall Street Journal on Wednesday.

With senators expected to vote along party lines, Republicans can afford only two defectors. If three vote no, the bill fails.

Adding a new twist to the ambitious legislation, Senate Republicans have bowed to Trump pressure and included a repeal of the Obamacare individual mandate in their tax overhaul.

Republicans are keen to take another stab at crippling the 2010 health care law.

Repealing the rule that requires individuals to have health insurance or pay a fine would save US$338 billion, the non-partisan Congressional Budget Office projected, money that could help pay for tax reform.

But the CBO also projected it would raise health insurance costs by 10 per cent, and lead to 13 million fewer people with coverage over the next decade.

'IF WE FAIL...'

Top Senate Democrat Chuck Schumer said such cost increases could "more than wipe out" the tax cuts seen by middle-class families.

Other Democrats warned that tax burdens will actually go up for millions of working-class and middle-class families.

A handful of Senate Republicans could make or break the legislation.

They include John McCain, Susan Collins and Lisa Murkowski, who together sank Trump's Obamacare repeal effort this summer.

Senator Lindsey Graham sounded a dire political warning.

"Whatever is wrong with this bill, we've got to make it better," he told Fox News. "If we fail, we are dead.... That's the end of the Republican majority." Congress is off next week for the Thanksgiving holiday, and when they return there will be little room for delay.

Senate Majority Leader Mitch McConnell wants to hold a vote right after Thanksgiving.

Then come negotiations to synchronise the House and Senate versions.

"We'll come to a common point and we'll get this to his desk at Christmas," House Republican Tom Cole said.

But the fusion could be tricky.

While the House version permanently cuts the corporate tax rate from 35 per cent to 20 per cent, effective in 2018, the Senate's would delay that cut by a year.

The House also maintains the nation's top bracket for the wealthiest individuals at 39.6 per cent, while the Senate lowers the top tier to 38.5 per cent.

AFP