US House approves deep tax cuts for businesses
Washington, 16 November (Argus) — The US House of Representatives today easily approved a tax bill that would cut corporate rates, but growing Republican divisions in the US Senate could complicate the push to enact sweeping tax changes this year.
House Republicans voted 227-205 to approve the bill. Democrats were united in opposition, joined by 13 Republicans who opposed the bill's elimination of a deduction for state and local income taxes.
The bill would cut corporate tax rates to 20pc from 35pc, allow immediate expensing for five years, and remove most US taxes on foreign income. Republicans say those changes will reverse years of lackluster growth. But Democrats say the bill would disproportionately benefit the rich, increase taxes on some middle-class workers and add $1.4 trillion to the deficit.
The oil and gas sector succeeded in retaining most industry tax breaks. The bill does eliminate a "section 199" manufacturing credit and an enhanced oil recovery deduction that are collectively worth about $11.2bn to the industry over the next decade. But the significantly lower tax rates and other changes would offset those losses.
Oil and gas groups cheered passage of the bill. American Petroleum Institute president Jack Gerard said it would "unleash economic growth." Independent Petroleum Association of America president Barry Russel said it would "help independent oil and natural gas producers of all sizes succeed."
The bill would also cut a federal wind production tax credit by 35pc, to 1.5¢/kWh.
The attention will now shift to the Senate, which is close to advancing a tax bill out of committee ahead of a floor vote sometime after 27 November. Republicans on 14 November unveiled major changes to their bill, including a plan to sunset almost all individual tax deductions in 2027 and repeal a requirement for individuals to obtain health insurance or pay a penalty.
Those changes would allow the bill to meet a requirement not to add to the deficit after 10 years. But they have added to criticism that the bill would hurt low- and middle-income workers, and might recreate the conditions that stymied Republican attempts to repeal former president Barack Obama's signature healthcare law.
Senator Lisa Murkowski (R-Alaska), who joined senators John McCain (R-Arizona) and Susan Collins (R-Maine) to block the healthcare repeal, faces a particularly difficult choice. That is because the tax bill will be paired with a measure to allow drilling in Alaska's Arctic National Wildlife Refuge, something Murkowski has been seeking for years.
Senator Ron Johnson (R-Wisconsin) yesterday became the first Republican to voice opposition to the bill over concerns that its treatment of pass-through rates would put small businesses at a disadvantage. Senator Bob Corker (R-Tennessee) has raised concerns about the bill's effect on the deficit but has not said he would vote against it.