US Congress approves $1.5 trillion tax bill

Global Business

US Congress approves $1.5 trillion tax bill President Donald Trump joined by Senate Majority Leader Mitch McConnell of Ky., Vice President Mike Pence, Speaker of the House Paul Ryan, R-Wis., Sen. Tim Scott, R-S.C., front right, and other members of congress, speaks during an event on the South Lawn of the White House in Washington, Wednesday, Dec. 20, 2017, to acknowledge the final passage of tax overhaul legislation by Congress. (AP Photo/Carolyn Kaster)

The U.S. Congress has passed the first major tax reform bill in 30 years, and it’s President Donald Trump’s first legislative win. However, the country’s been thrown into heated debate over whether it really helps the average American.

CGTN’s Jessica Stone reports.

It’s a once in a generation change to the way Americans pay taxes — passed without a single vote from the opposition party Democrats.

U.S. President Donald Trump and his party celebrated in the hours after that vote, saying it’s not just a victory for their agenda, but for working Americans and for long-term economic growth.

“$3.2 Trillion, just think of it, in tax cuts for American families including doubling the standard deduction and doubling the child tax credit,” Trump said.

The measure does lower taxes for almost all Americans, but the tax breaks for individuals expire after 10 years and if they’re not extended, they go back up. The bill also eliminates a core element of the national healthcare program known as Obamacare – dropping the mandate that all citizens get coverage.

The congressional budget office estimates that will cause 13 million Americans to lose coverage within ten years.

“And so today, the Republicans take their victory lap for successfully pillaging the American middle class to benefit the powerful and the privileged,” Congressional Democratic Leader Nancy Pelosi said.

Without question, the long term winners under the bill — are corporations. Their tax rate drops from 35 percent to 21 percent . Multi-national corporations also get favorable changes, and the bill incentivizes U.S. companies to bring back off-shore revenues.

Key U.S. trading partners like the EU said the measure could hinder trade between the US and Europe, disadvantage international financial firms, and discriminate against foreign businesses operating in the U.S. “It gives the American corporations a bit of a home field advantage in the U.S. against other companies. And we’ve seen the EU and others begin to talk about whether or not this particular process that was followed – hasty and very self-referential – might be a violation of certain WTO provisions,” Max Wolff, Chief Economist at the Phoenix Group said.

According to government estimates, the new U.S. tax measure will add almost $1.5 Trillion to the national deficit over the next decade. Supporters said the tax cuts will spur enough economic growth to off-set the costs.

As they leave to return to their districts for the Christmas holiday, that’s a message the president’s party will have to sell to a skeptical American public.

Passage of this tax package marks the first major legislative accomplishment from Trump since he took office. He’s expected to sign it into law in the coming days, either at his ornate Mar-a-Lago estate in Florida or at the While House.

Harlan Ullman breaks down how the tax bill will shape the US economy

CGTN’s Rachelle Akuffo spoke with Atlantic Council’s senior advisor Harlan Ullman about U.S. tax reform and the possible impact on the economy.