US tax Bill promises biggest reform of law in 31 years

Chris Timms.
Chris Timms.
United States tax reform will feature again this week as the House and the Senate prepare to vote on a compromise tax Bill by midweek.

Craigs Investment Partners broker Chris Timms said yesterday the tax Bill would reduce the US corporate tax rate from 35% to 21% and reduce the individual tax rate for many individuals, at the expense of some key deduction which will be lost.

Also, how expenses are charged will change, to encourage capital spending.

If passed, the Bill would be the biggest rewriting of US tax since 1986 and would provide Republican lawmakers and Donald Trump with their first major legislative victory since they took control of the White House in January, in addition to Congress, he said.

Democrats had been unified against the measure, calling it a giveaway to corporations and the rich that would drive up the federal deficit.

The tax bill was expected to add at least $US1trillion ($NZ1.43trillion) to the $US20trillion US national debt over 10 years, even after accounting for the economic growth it might spur, according to independent analyses.

It would offer a mixed bag for individuals, including middle-class workers, by roughly doubling a standard deduction that does not require itemisation, but eliminating or scaling back other popular itemised deductions and exemptions.

The Bill would maintain seven individual and family income tax brackets but cut rates. Highest-earning Americans would pay 37%, down from 39.6%.

Most individual provisions, including the lower tax rates, were temporary and would expire, while the corporate rate cut and other business provisions would be permanent.

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