A $2.1 trillion tax cut

Stuff reports:

US Senate Republicans passed a $1.5 trillion (NZ$2.1 trillion) tax bill early Saturday morning (US local time) that bestows massive benefits on corporate America and the wealthy while delivering mixed blessings to everybody else.

After a frantic round of negotiations, Republicans came together in near unanimity behind the landmark legislation. The final vote was 51 to 49, with Sen. Bob Corker (R-Tenn.) the lone GOP holdout. Democrats unanimously opposed the bill.

The measure still has to be reconciled with an earlier House-passed version before being sent to President Trump. Yet in getting the bill through the Senate, Republicans succeeded where they failed earlier this year, when their efforts to repeal the Affordable Care Act collapsed in mortifying fashion.

This time, urged on by donors and fearful of facing voters in next year’s midterm elections without a legislative achievement to show, Republicans said time and again that failure was not an option.

“The American people wanted change,” said Sen. John Barrasso (R-Wyo.). “We were able to deliver.”

The centrepiece of the GOP plan is a move to lower the corporate tax rate from 35 per cent to 20 per cent, starting in 2019. The Senate tax bill would also temporarily cut tax rates for families and individuals until 2025.

It’s a big win for Trump and the drop in company tax rate from 35% to 20% is huge. This will put pressure on NZ to lower its rate of 20% as more and more companies do decide where to locate based on corporate tax rates.

The downside for the US is they are running a huge deficit, and this will increase the deficit. When you have a surplus, absolutely you should cut taxes. But the US political system seems unable to control on reduce spending, so this just increases the deficit and debt which makes an economic crash in the future for the US more likely.