US Senate passes budget in first step toward tax overhaul

WASHINGTON, Oct 20 (AFP): The US Senate narrowly passed a 2018 federal budget Thursday, clearing the way for President Donald Trump's controversial tax overhaul that includes $1.5 trillion in tax cuts.
The Republican measure, which passed along party lines, is a largely symbolic gesture. But importantly, it includes special instructions that allows Trump's party to pass historic tax reforms with a simple majority vote.
"With this budget, we're on a path to delivering much needed relief to American individuals and families who have borne the burdens of an unfair tax code for entirely too long," Senate Majority Leader Mitch McConnell said immediately following the 51-49 vote.
Trump hailed the vote as "an important step in advancing the administration's pro-growth and pro-jobs legislative agenda," saying it "creates a pathway to unleash the potential of the American economy through tax reform and tax cuts."
Nine months into his presidency, Trump's tax gambit is the last chance to salvage key planks of his 2017 legislative agenda.
After failing to repeal former president Barack Obama's health care law, adoption of tax cuts before year's end has become the top priority for Republicans who control Congress.
Trump took office in January arguing that tax reform will further boost the economy and benefit ordinary Americans.
"Frankly, I think we have the votes for the tax cuts which will follow fairly shortly," Trump said at the White House.
"We're really doing well, but we can do something very, very spectacular if we're given the tax cuts."
The politically explosive reforms are being addressed in several steps, beginning with Thursday's vote on a resolution to establish the 2018 budget framework.
The measure contains language that allows the Senate to use a process known as "reconciliation" to fast-track the tax overhaul by requiring only a simple majority in the 100-member Senate, instead of the 60 generally required to move major legislation.
With Senate Republicans holding 52 seats, that would mean they no longer need Democratic support, unless there are more than two Republican defections.
The basis of the reforms, outlined last month, is a drop in the corporate tax rate from 35 to 20 percent, 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."
The top one percent of earners will see their after-tax incomes rise 8.5 per cent in 2018, while the 95 per cent lower down the scale will see a gain of 0.5-1.2 per cent, according to the Tax Policy Center, a Brookings Institution-Urban Institute joint venture.