US Senate unveils new Trump tax draft with plans to vote soon
This is as the US moves closer to a vote on the tax cut package with a July 4 deadline set by President Donald Trump. PHOTO: REUTERS
US Senate unveils new Trump tax draft with plans to vote soon
WASHINGTON - Senate Republicans unveiled a new version of their US$4.2 trillion (S$5.1 trillion) tax cut package, moving closer to a vote as they near a July 4 deadline set by President Donald Trump.
The new draft reflects compromises among warring factions of the Senate GOP which has been divided over how much to cut safety-net programs such as Medicaid and how rapidly to phase out of renewable energy tax credits enacted under the Biden administration.
A tentative deal with House Republicans to increase the state and local tax deduction is included. The bill would raise the SALT deduction cap from US$10,000 to US$40,000 for five years before snapping back to the US$10,000 level. The new cap applies to 2025 and rises 1 per cent in subsequent years.
Republicans plan to start voting on the tax bill on June 28 with final votes coming as soon as early on June 29. Party leaders plan to bring House members back to Washington early next week for what they hope will be final approval of the measure in time for Trump's Independence Day deadline.
It is not yet clear if the 50 Senate Republicans needed to pass the bill are all on board. The bill can be further altered on the Senate floor to secure the votes if needed. The House could make more changes if Speaker Mike Johnson has trouble corralling votes for the measure.
To win over moderate Republicans, the bill would create a new US$25 billion rural hospital fund aimed at helping some Medicaid providers avoid cuts. Republican Senator Susan Collins of Maine, however, had demanded a US$100 billion fund.
Moderate Republicans also won a delay from 2031 to 2032 for when a new 3.5 per cent cap on state Medicaid provider taxes takes effect. The provider tax is a gimmick by which states boost their federal Medicaid reimbursement rates and many states have come to rely on the practice.
Another change in the measure is that a tax credit for hydrogen production wouldn't be phased out until 2028 for projects that begin construction before then. Previous version ended the credit after 2025.
The measure would avert a US payment default as soon as August by raising the debt ceiling by US$5 trillion. BLOOMBERG
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