WASHINGTON -- US Senate Republicans made last-minute changes to their tax bill to secure enough votes to pass the sweeping legislation on Saturday and move on to negotiations this week on a final measure with Republicans in the House of Representatives.
The deals enabled leadership to get 4 wavering Republican senators on board with the legislation by addressing issues such as deductions for state and local property taxes and the tax treatment of so-called pass-through enterprises.
Republicans also agreed to changes to help pay for the deals, including higher tax rates on the repatriation of US corporate profits held overseas.
Following are some of the changes:
* STATE AND LOCAL PROPERTY TAXES: Senator Susan Collins got Senate Republican leaders to include a federal deduction for up to $10,000 in state and local property taxes in the legislation, which eliminates a similar deduction for state and local income and sales taxes.
The nonpartisan Joint Committee on Taxation, or JCT, estimates that the change will mean the loss of an additional $148 billion in federal revenue over the next decade, compared with a legislative proposal approved earlier by the Senate Budget Committee.
* PASS-THROUGHS: Under pressure from Senators Ron Johnson and Steve Daines, Senate Republican leaders increased to 23 percent from 17.4 percent a deduction for the owners of pass-through enterprises including small businesses, S-corporations, partnerships and sole proprietorships.
JCT estimated revenue loss versus earlier legislative proposal: $114 billion.
* FULL EXPENSING: Senator Jeff Flake, who had been a holdout over deficit concerns, agreed to vote "yes" after Republican leaders did away with an abrupt end to the full business expensing of capital investments after five years. Instead, the bill phases out full expensing in 20 percent increments over 4 years, beginning in year 6. Flake said Congress would not have been able to suddenly eliminate full expensing and that benefit would have been left to bleed red ink for years to come.
JCT revenue loss estimate versus earlier legislative proposal: $34 billion.
* MEDICAL EXPENSES: Collins also added language to reduce the threshold for deducting unreimbursed medical expenses for 2 years to 7.5 percent of household income from 10 percent.
JCT estimated revenue loss versus earlier legislative proposal: $4.6 billion.
* RETIREMENT SAVINGS: Collins persuaded Republican leaders to retain catch-up contributions to retirement accounts for church, charity, school and public employees.
No immediate JCT revenue impact estimate.
* INDIVIDUAL ALTERNATIVE MINIMUM TAX: Republicans rescinded an earlier provision to repeal the individual AMT but increased exemption amounts and phase-out thresholds to make the tax less onerous.
JCT estimated revenue gain versus earlier legislative proposal: $133 billion over a decade.
* REPATRIATION: Senate Republicans increased tax rates on the repatriation of US corporate profits held overseas to 14.5 percent for liquid assets and 7.5 percent for illiquid holdings, up from 10 percent and 5 percent, respectively.
JCT estimated revenue gain versus earlier legislative proposal: $113 billion.
* CORPORATE ALTERNATIVE MINIMUM TAX: Republicans decided to retain this tax, after initially proposing its repeal.
JCT estimated revenue gain versus earlier legislative proposal: $40.3 billion.
source: news.abs-cbn.com
NEW YORK - The Dow Jones Industrial Average Index closed higher on
Tuesday, driven by solid earnings from industrial companies, while the
dollar index was little changed after reports of Republican senators'
support for John Taylor as Federal Reserve chair.
The dollar index rose 0.01 percent, up from an earlier low, as a Bloomberg report on support for Taylor offset diminished hopes for a passage of a major tax cut.
Optimism for a tax overhaul slipped after a CNBC report, citing an aide of Senate leader Mitch McConnell, that 3 GOP Senators may not back the Republican tax bill.
The Bloomberg report also pushed 10-year US Treasury note yields to a more than five-month high. Benchmark 10-year notes last fell 13/32 in price to yield 2.4226 percent, from 2.375 percent late on Monday.
The 30-year US Treasury bond last fell 28/32 in price to yield 2.9348 percent, from 2.89 percent late on Monday.
Earnings from Caterpillar Inc and 3M helped push the Dow Industrials up 167.8 points, or 0.72 percent, to 23,441.76.
The world's largest construction and mining equipment maker, Caterpillar Inc, beat third-quarter profit and sales estimates and raised its full-year forecasts. The Peoria, Illinois company expects revenue in its construction business to surge about 20 percent and its mining business to jump 30 percent. The company's stock gained 5 percent.
3M, another Dow component, which makes a range of products such as autoparts and office supplies, reported upbeat results, helping its stock rise 5.9 percent.
Earnings have gotten off to a strong start, with 73 percent of 120 S&P companies beating profit expectations as of Tuesday.
The S&P 500 gained 4.15 points, or 0.16 percent, to 2,569.13 and the Nasdaq Composite added 11.60 points, or 0.18 percent, to 6,598.43.
European shares ended mixed at their close on Tuesday in anticipation of Thursday's European Central Bank meeting.
"While the ECB is widely expected to announce a reduction, the size and duration of it are still unknown, which could cause a lot of volatility on the day and determine how the euro reacts," said Craig Erlam, a senior market analyst for OANDA in London, in an email.
Although the German, French, Italian and Spanish indexes all rose, the pan-European STOXX 600 closed down 0.4 percent.
The pan-European FTSEurofirst 300 index lost 0.30 percent and MSCI's gauge of stocks across the globe gained 0.03 percent.
Apple supplier and chipmaker AMS jumped 21.8 percent after reporting third-quarter sales just under expectations. Analysts said strong fourth-quarter guidance from the iPhone supplier offset the miss.
Strong profits from Spain's Caixabank also lifted the IBEX 0.4 percent after its Catalonia-related underperformance.
Japan's Nikkei had extended its 16-day winning streak to a 21-year peak overnight following the weekend election win for Prime Minister Shinzo Abe.
The New Zealand dollar hit a 5-month low after the incoming Labour-led coalition government said it plans to review and reform the Central Bank Act to include employment, alongside inflation, as a dual target.
Spot gold dropped 0.4 percent to $1,276.82 an ounce, remaining near a two-week low.
US crude rose 1.08 percent to $52.46 per barrel and Brent was last at $58.34, up 1.69 percent.
source: news.abs-cbn.com
