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 - Investor optimism over US tax reforms and the global economy spurred Wall Street and world stock markets to fresh highs on Thursday, while the dollar gained as data pointed to solid US economic growth.
The Dow, S&P 500 and Nasdaq stock indexes notched record-high closes for a fourth consecutive day, as did MSCI's gauge of equity markets in 47 countries, as rosy economic data and budding signs US tax reform legislation will pass cheered investors.
The Republican-controlled Congress hastened the overhaul of the US tax code by moving closer to agreement on a budget resolution, taking a procedural step that would help advance eventual tax legislation.
US investors are warming to the notion that a new fiscal policy will be in place by the first quarter, said Phil Orlando, chief equity strategist at Federated Investors in New York.
Most investors felt that nothing would come of President Donald Trump's tax reform effort until last week, he said.
"It sounds like they're serious about drafting tax reform legislation and that gives everyone greater confidence that this might actually might happen," Orlando said.
Tax reform could lift economic growth and corporate earnings estimates for 2019, and push his S&P 500 target above 3,000 for that year, Orlando said.
The S&P 500 rose for an eighth straight session and set a sixth consecutive record closing high, the longest such streak since an eight-day run in 1997.
The Dow Jones Industrial Average rose 113.75 points, or 0.5 percent, to end at 22,775.39. The S&P 500 gained 14.33 points, or 0.56 percent, to 2,552.07 and the Nasdaq Composite added 50.73 points, or 0.78 percent, to 6,585.36.
MSCI's all-country world stock index gained 0.24 percent. In Europe, the pan-regional FTSEurofirst 300 index rose 0.2 percent to close at 1,536.56.
A Reuters poll found sentiment that global stocks will continue to climb over the coming year on rising optimism about growth worldwide. However, a slim majority of equity strategists also expect the current eight-year bull run to end in 2018.
"There really is no alternative to being in the equity market," said Larry Hatheway, chief economist at GAM Investment Management in Zurich.
"There's no reason for anybody to sell equities at this point in time. There are no threats to an equity bull market that seem to be material," he said.
The US trade deficit fell in August as exports of goods and services rose to the highest in more than 2-1/2 years. Separately, the number of Americans filing for unemployment benefits fell more than expected last week.
Gold dipped on news of the data as it bolstered the notion US interest rates will be raised in December. Philadelphia Federal Reserve Bank President Patrick Harker said he was penciling in one more rate increase this year and three in 2018.
US gold futures for December delivery settled down $3.60 at $1,273.20 per ounce.
The dollar index, tracking the greenback against a basket of key currencies, held under seven-week highs as investors awaited Friday's US payrolls report for September to assess the impact of hurricanes Harvey and Irma. The storms proved a drag on robust business spending that was seen in the trade data.
The dollar index rose 0.53 percent, with the euro down 0.47 percent at $1.1704. The Japanese yen weakened 0.08 percent versus the greenback to 112.83 per dollar.
Oil prices rose as signs Saudi Arabia and Russia will limit production through next year overshadowed record US exports and the return of production at a major Libyan oilfield.
Brent rose $1.20 to settle at $57.00 per barrel, while US crude settled at $50.79, up 81 cents.
source: news.abs-cbn.com
