US: Tax legislation progresses but problems ahead - MUFG
The US House last night voted through its tax overhaul bill by 227 votes to 205 with 13 Republicans voting against the bill and no Democrats supporting it, points out Derek Halpenny, European Head of GMR at MUFG.
“This will be seen as a major victory for the Republican Party but the tough work has hardly begun. The Senate version of the tax overhaul legislation could be voted on in the week following Thanksgiving but differs in many fundamental ways from the House bill. While the corporate tax cuts are permanent, the tax cuts for individuals will expire. The Senate bill also includes the repeal of the Obamacare’s individual mandate which basically gives the Senate more money to play with but means ultimately the Senate bill will make income-earners under USD 75k worse off. A true tax bill for the wealthy is what the Democrats claim.”
“With the Republicans only able to lose three votes in the Senate, it remains difficult to envisage a positive outcome. The lack of enthusiasm and reaction in the financial markets to the House bill being passed indicates the high degree of scepticism in the markets too.”