U.S. Senate passes Republican tax reform bill 

Faced with impatient conservative voters demanding results, Senate Republicans approved a major overhaul of the nation’s tax code by slashing tax rates on corporations, small businesses and many individuals while scrapping dozens of long-time deductions.

RELATED: Senate passes sweeping tax overhaul by 51-49 vote

Brushing aside objections from Democrats that the bill provides a massive tax cut for the wealthy and discounting non-partisan reports that the measure will add staggering amounts of new federal debt, Senate Republicans passed the bill shortly before 2 a.m. Saturday by a narrow margin of 51-to-49. 

Unless the House agrees to the Senate bill, a conference committee of Senate and House negotiators will have to resolve the differences in the two bills before the first major revisions in the tax code since 1986 can be sent to President Donald Trump for his signature. 

The White House issued a statement Saturday saying Trump “applauds” the Senate for passing the bill, adding “the senators who voted for these historic tax cuts did a great service to their constituents as they supported putting America first, growing the economy, and rebuilding our great country.” 

Sen. Rob Portman, R-Ohio, who was one of the architects of the bill, voted for the measure while Sen. Sherrod Brown, D-Ohio, opposed it. Republican Sen. Bob Corker of Tennessee was the only GOP lawmaker to vote against the bill. 

RELATED: House GOP unveils plan to avert government shutdown

In a floor speech shortly after 8 p.m., Brown complained “we can find trillions for corporations, (but) this is all we can do for working families? What we must do is vote this bill down and start over.” 

Having failed earlier this year to scrap the 2010 health law known as Obamacare, congressional Republicans have been under intense pressure to demonstrate to their voters that they can govern and pass a major part of their agenda. 

GOP strategists warned Republican lawmakers they could lose the House and Senate next year without passing a tax bill. They feared that traditional Republican financial donors would scale back campaign dollars they funnel to GOP candidates. 

But by passing the bill, Republicans have gambled on the future fiscal health of the U.S. government. Trump has ruled out restraining the out-of-control growth of the entitlement programs of Social Security and Medicare, which are the main causes of the deficit. 

In essence, Republicans are hoping the tax bill will spark economic growth and not add trillions to the deficit. But if the Republicans are wrong, they will be starving the government of the money it needs to finance entitlement programs, along with national defense, education, criminal justice, roads, bridges and other transportation projects. 

“Notching a political win isn’t a good enough reason to throw common sense and legislative responsibility out the window,” said Senate Minority Leader Chuck Schumer, D-N.Y. 

Before the vote Senate Democrats released statements by virtually every Senate Republicans over the past few years assailing massive deficits, quoting Portman as saying in a statement in 2014 “our country cannot afford to trillions of dollars to our national debt over the next decade.” 

In a floor speech Wednesday, Portman cited a study by the accounting firm of Ernst & Young claiming “if we had had the tax rate that we have in this proposal, a 20 percent tax rate on these businesses, if we’d had that in place since 2004, there would be 4,700 more U.S. companies today.” 

Portman said the reduced corporate tax rate “is going to mean more jobs and more investment coming right here to this country instead of going overseas. It’s also true that there will be more foreign investment here.” 

In this polarized climate, Senate Republicans made no effort to win the votes of Democrats, much like 2010 when Democrats had little interest in gaining the support of Republicans for passage of Obamacare. 

Like the House bill, the Senate GOP plan reduces the corporate tax rate from 35 percent to 20 percent, although the Senate delays that reduction until 2019. 

The bill creates seven individual tax brackets compared to just four in the House bill. The Senate brackets range from a low of 10 percent to 38.5 percent for the wealthiest taxpayers. The other five brackets would be 12 percent, 22.5 percent, 25 percent, 32.5 percent and 35 percent. 

The Senate bill retains current deductions for home mortgage interest, 401 K retirement contributions, charitable contributions and medical expenses. Both the Senate and House measures end the personal exemption, which allows taxpayers to take a $4,050 exemption for every family member. 

The standard deduction, which is the amount people who don't itemize can deduct from their income, would nearly double to $24,000 a year for married taxpayers and $12,000 for those who are single filers. Currently, the standard deduction is $12,700 for married couples filing jointly and $6,350 for single taxpayers. 

The increase in the standard deduction is designed to simplify the code. If Americans choose the new higher standard deduction, they could not take deductions such as home mortgage interest. But they would be able to file their taxes on a single card. 

Both the House and Senate version prohibit taxpayers from deducting state and local income taxes from their returns. But both versions allow Americans to deduct as much as $10,000 a year in real estate taxes. 

The non-partisan Congressional Joint Committee on Taxation calculates the Senate bill would add $1 trillion to the nation's publicly held debt during the next decade. The publicly held debt is money the government owes to private and public investors who buy treasury bonds or other government notes. 

That means unless lawmakers in the future restrain federal spending or increase taxes, the federal government’s debt compared as a ratio of gross domestic product is likely to approach 100 percent, the type of debt the country has not seen since the end of World War II. 

“There are no credible estimates to show that this bill comes close to paying for itself,” said Michael Peterson, president and chief executive officer of the Peterson Foundation, a Washington non-profit which favors lower deficits. “It is unfortunate that fiscal concerns have been cast aside in favor of passing the cost on to future generations.” 

The measure also kills the financial penalty imposed on Americans who do not buy individual health insurance policies through the market established by Obamacare.

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