Il Senato Usa approva 51 – 48 la riforma fiscale. Inizia una nuova era.

Giuseppe Sandro Mela.

2017-12-20.

«Today we are giving the people of this country their money back. This is their money after all!»

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«Republicans barreled toward a massive victory Tuesday with the House and Senate voting to approve a $1.5 trillion tax cut, notching the first major legislative win of the Trump presidency.

In one bill, Republicans said they were checking off three major parts of their agenda: The massive tax overhaul is coupled with a repeal of Obamacare’s individual mandate and authority to drill for oil in a remote Alaska refuge» [The Washington Times]

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«In a vote in the early Wednesday morning hours, the Senate approved the final version of the first overhaul of the US tax code in more than 30 years, handing President Donald Trump and congressional Republicans their most significant legislative victory of 2017» [Cnn]

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«The House earlier approved the bill comfortably, 227 to 203. In the Senate, it was 51 to 48.»

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«Corporate taxes will be set at 21%, instead of the current rate of 35%.  ….

– Less inheritance tax

– An expanded child tax credit

– Lower taxes on overseas profits»

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«Last week, the finance ministers of Europe’s five biggest economies — Germany, France, the UK, Spain and Italy — wrote an anxious letter to their American colleague, US Treasury Secretary Stephen Mnuchin, and copied it to all senior Republican politicians in the Congress and Senate.»

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«The United States is Europe’s single most important trade and investment partner,” the finance ministers wrote. “It is important that the U.S. government’s rights over domestic tax policy be exercised in a way that adheres with international obligations to which it has signed-up. The inclusion of certain less conventional international tax provisions could contravene the US’s double taxation treaties and may risk having a major distortive impact on international trade»

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«The European finance ministers argued that this measure would break WTO rules because it levies a tax only on foreign goods and services, not on the equivalent domestically produced goods and services»

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«the Senate bill featured a “base erosion and anti-abuse tax” (BEAT) provision. “Base erosion,” or more properly “base erosion and profit shifting” (BEPS), is a technical term referring to various accounting schemes corporations use to legally shift profits from where they’re earned, to ultra-low tax jurisdictions.»

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«some of the proposed measures could constitute unfair trade practice and may discourage non-US financial institutions from operating in the US»

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«when US companies earn income outside the US via licensing fees, those fees would be taxed at a reduced corporate tax rate of 12.5 percent (compared to a proposed 21 percent federal tax rate for other corporate profits)»

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«the US will go from being a high-tax to a low-tax country. Until now, the tax burden on companies has been significantly higher in the US, with a tax rate of 39 percent, compared to 30 in Germany or 34 in France»

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«However, countries like Ireland or the Netherlands already do that too, …. Therefore, the indignation of EU finance ministers is not very credible on this particular point.”»

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È finita un’era.

Se anche adesso i liberal ed i socialisti ideologici assassinassero il Presidente Trump, con la nomina del giudice Gorsuch alla Corte Suprema e con questa riforma della tassazione i tempi sono mutati.

L’epoca dello statalismo vorace divoratore di imposte destinate a mantenere un ipertrofico corpo di burocrati e funzionari pubblici soffocando il popolo con l’oppressione burocratica di servizi inconsistenti è finita.

Sicuramente servirà un lungo lasso di tempo perché gli stati occidentali evolvano verso il così detto “stato minimo”, ma la strada è quella.

Le altissime grida dei liberal e dei socialisti ideologici sono ben comprensibili: Mr Trump ed i nuovi tempi portano via loro il substrato da parassitare, la fonte del loro sostentamento: alla fine, anche loro dovranno lavorare per vivere.

Il comportamento del’Unione Europea è pateticamente infantile.

Fino a quando era l’Unione ad avere tassazione sulle imprese minore di quella degli Stati Uniti, tutto andava bene. Sino a quando Lussemburgo, Irlanda ed Olanda si comportavano da stati filibustieri con tassazioni stracciate tutto andava bene. Ora che Mr Trump ha abbassato le tasse negli Stati Uniti strillano con la veemenza della vecchia zitella che vede sfumare l’ultima occasione di accasarsi.

Adesso, volente o nolente, questa stupidamente orgogliosa Unione Europea dovrà piegarsi al volere del mondo: non sarà certo il mondo a prender lezioni da essa.

Deve scegliere tra il ridurre lo statalismo, e quindi le tasse, oppure finire come Cuba, Venezuela e Korea del Nord.

Ribadiamo infine un concetto che per quasi due secoli è stato bandito dal vecchio Continente.

Le leggi sono fatte per gli uomini, non gli uomini per le leggi.

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→ Bbc. 2017-12-20. Trump’s tax bill: US Senate passes reform legislation

The US Senate has approved the most sweeping overhaul of the US tax system in more than three decades.

Republicans say the tax cuts for corporations, small businesses and individuals will boost economic growth.

Democrats, who all voted against it, say it is designed to benefit the ultra-rich at the expense of the national deficit.

For final approval, the legislation must go back to the House on Wednesday for a procedural issue.

If it passes, as expected, it will be President Donald Trump’s first major legislative triumph.

– The Republican tax plan explained

– Will Trump’s plans trigger a tax war?

– How the reforms affect us all

Shortly before the final tally was announced, protesters in the Senate’s public gallery shouted “kill the bill”. They were escorted out.

What will the bill do?

Corporate taxes will be set at 21%, instead of the current rate of 35%.

The bill will also lower individual tax rates, albeit temporarily.

Other key elements include:

– Less inheritance tax

– An expanded child tax credit

– Lower taxes on overseas profits

Parties strictly divided

The vote has kept to party lines: Republicans in favour, Democrats in protest.

Republicans have majorities in both houses of Congress. The House earlier approved the bill comfortably, 227 to 203. In the Senate, it was 51 to 48.

Democrat leader Chuck Schumer warned Republicans that they would pay a price for the “awful legislation” in next year’s mid-term elections.

“The substance and polling are so rotten that a year from now Republicans will be running from this bill in shame for voting yes this evening,” he said.

Speaker Paul Ryan remained wholly enthusiastic, saying: “Today we are giving the people of this country their money back. This is their money after all!”

Who are the winners and losers?

The tax reform is good news for businesses, particularly multinational corporations and the commercial property industry.

The extremely wealthy and parents sending their children to private schools are set to benefit.

However, families living in high-tax, high-cost states could lose out, so could those paying for their own health insurance.

Read the full explanation

In the immediate future, the plan will see the vast majority of tax payers having lower tax bills, but the cuts expire in 2025.

By 2027, the Tax Policy Center estimates that the overall change would be negligible. And 53% of taxpayers would face higher bills, many of them in the lower income brackets.

It could also be bad news for Alaskan animals as the bill attached a measure to open drilling in parts of the Arctic that have been protected for environmental reasons since 1960.

Read more on the effects on Alaska’s wilds

What happens next?

The bill’s final passing hit a last-minute hurdle when it was found that three procedural rules had been violated. As small changes to the wording were made, it now needs to return to the House of Representatives to be approved again.

Some democrats say it is the speed at which the bill has been put together that caused the final hitch.

“The House re-vote is the latest evidence of just how shoddily written the GOP tax scam really is,” House Democratic leader Nancy Pelosi said in a statement.

Republicans insist that such a major overhaul will always have hiccups, which are just part of the procedure.

“Listen, people screw up. A member of the staff screwed up. It’s not the end of Western civilisation,” Republican Senator John Kennedy told MSNBC, according to Reuters news agency.

It wasn’t easy, but in one fell legislative swoop, Republicans have achieved some long-sought political goals.

Subject to a vote in the House early on Wednesday, they have reduced taxes by more than $1.4 trillion (£1tn) over 10 years, including significant changes to the corporate tax structure.

Congressional conservatives also opened the Arctic National Wildlife Refuge to oil drilling – a pitched partisan battle for years. And it set a bomb at the heart of Obamacare by ending the tax penalty for those who don’t have medical insurance starting in 2019.

What one Congress can do another can undo, of course, and the task ahead for Republicans is selling a sceptical public on the benefits of their plan.

While they may argue that Americans will come around once they see lower tax bills, many may have already made up their mind.

Like Obamacare eight years ago, this tax legislation was passed by partisan muscle alone. And like that law, many Americans view the legislation as largely benefitting others. They will be difficult to convince otherwise.

Repealing key provisions of this tax law will be as uniting for Democrats as healthcare repeal was for conservatives.

Donald Trump and Republicans have their victories. They will have to fight to keep them.

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→ Deutsche Welle. 2017-12-20. US Senate approves Donald Trump’s tax overhaul

The US has approved the largest rewrite of the US tax code in more than 30 years. The House of Representatives, which had already passed an earlier draft, is expected to give its final approval later on Wednesday.

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The US Senate narrowly approved sweeping tax reforms in the early hours of Wednesday, putting President Donald Trump within touching distance of his first major legislative victory. 

The bill passed the Senate along party lines by 51 votes to 48. All Democrats voted against Trump’s tax overhaul, which hands tax breaks to corporations and drops rates for families at all income levels, with the largest benefits going to America’s wealthiest. 

Vice President Mike Pence presided over the Senate Chamber in case he needed to break a tied vote. After the bill passed the Senate floor, Pence proclaimed to loud cheers that “the Tax Cuts and Jobs Act has passed.”

Shortly after the Senate approved the bill, Trump took to Twitter, saying: “The United States Senate just passed the biggest in history Tax Cut and Reform Bill. Terrible Individual Mandate (ObamaCare) Repealed.”

he bill will now go back to the House of Representatives, who will vote on it again later on Wednesday.

Delay in the vote

US Republicans had already passed sweeping tax reforms in the House of Representatives on Tuesday, but were forced to send the bill back for revision after it appeared to violate Senate rules.

About an hour after the bill passed the House, the Senate voted along party lines to debate the legislation after it emerged the bill would have to be modified as three provisions appeared to violate Senate rules.

‘Mad dash’

The offending provisions related to educational savings accounts for home schooling and private university endowments. 

“In the mad dash to provide tax breaks for their billionaire campaign contributors, our Republican colleagues forgot to comply with the rules of the Senate,” Democrat Senators Bernie Sanders and Ron Wyden said in a joint statement after the blunder emerged.

If it eventually passes, as expected, the $1.5-trillion (€1.27-trillion) package will provide steep tax cuts for businesses and the wealthy and more modest cuts for middle- and low-income families starting in January and February 2018. It revamps how the US taxes multinational companies, and introduces a new tax deduction for the owners of “pass-through” businesses, ranging from mom-and-pop stores to large real estate and financial enterprises.

However, while corporate tax cuts will remain permanent, cuts for individuals will expire in 2026 to comply with Senate rules.

Initial jubilation

President Donald Trump initially celebrated the bill’s passing by the House on Twitter, congratulating House Speaker Paul Ryan along with Representatives Kevin McCarthy, Steve Scalise and Cathy McMorris Rodgers, who he called “great House Republicans who voted in favor of cutting your taxes!”

Ryan hailed the package, saying “today, we give the people of this country their money back.”

The House initially voted largely along party lines: 227-203, with zero Democrats voting in favor. Voting is expected to be exceptionally close in the Senate with Vice President Mike Pence delaying a controversial Middle East trip in case he was needed to break a tie.

US stocks fell on Tuesday over concern about the bill’s effect on years of monetary policy stimulus and the future of interest rates.

GOP Senate leader McConnel: ‘Public will learn to love it’

Despite passing in both chambers,  Trump’s tax reform package remains deeply unpopular with most of the public, who see the bill’s biggest benefits going to the wealthy. The Republican’s drive to slash taxes is also expected to push the US’ national debt even higher.

Democrats have labelled it a “giveaway” to corporations, who they don’t see hiring more workers or raising wages on the back of the breaks. 

Nevertheless, Republicans insisted that the public would benefit and eventually respond positively. “If we can’t sell this to the American people, we ought to go into another line of work,”   Senate Majority Leader Mitch McConnell said.

“The proof will be in the paychecks,” Rob Portman, a Republican Senator from Ohio, said during the nighttime debate. “This is real tax relief, and it’s needed.”

Democrats, however, continued to chide the bill after it passed the Senate, with New York Senator Chuck Schumer telling Republicans “This is serious stuff, we believe you are messing up America.”

Democrats are expected to seize upon the bill’s unpopularity ahead of next year’s congressional elections.

“Every fundraiser, every fat check from a billionaire, and every champagne and caviar party has been about getting to this day, the day when the politicians they put in charge of Washington would pay them back with a $1.5 trillion giveaway,” said Democratic Senator Elizabeth Warren. 

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→ Deutsche Welle. 2017-12-20. US tax reform breaks global rules, EU says

European finance ministers are worried. They say the United States’ big tax reform bill contains measures that would unfairly disadvantage European business and contravene global fair-taxation rules. Are they right?

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Last week, the finance ministers of Europe’s five biggest economies — Germany, France, the UK, Spain and Italy — wrote an anxious letter to their American colleague, US Treasury Secretary Stephen Mnuchin, and copied it to all senior Republican politicians in the Congress and Senate.

The letter’s thrust: The draft US tax bill, if passed as written a week ago, would represent a break with global fair-taxation rules as applied to corporations, and represent a thinly disguised form of trade war.

“The United States is Europe’s single most important trade and investment partner,” the finance ministers wrote. “It is important that the U.S. government’s rights over domestic tax policy be exercised in a way that adheres with international obligations to which it has signed-up. The inclusion of certain less conventional international tax provisions could contravene the US’s double taxation treaties and may risk having a major distortive impact on international trade.”

A day later, a similar letter was sent to Mnuchin by the European Commission’s four most senior economic officials and made many of the same points.

Keeping mum

The two letters didn’t get much of an answer — at least not a public one, though quiet edits to the bills taking European concerns into account may be happening behind the scenes.

Draft federal legislation in the US always exists in at least two separate versions: one drafted in the Senate, and the other in the House of Congress. The “conference process” is the negotiation that reconciles the differing House and Senate versions of a draft bill. It’s due to come to a close this week.

Three specific measures were brought up in the European letters. 

Excise tax

First, the House bill proposed a new “excise tax” of 20 percent, levied on payments made when an American company buys goods or services from a foreign subsidiary or “affiliate” — unless the subsidiary elects to treat the payments as income in the US.

The European finance ministers argued that this measure would break WTO rules because it levies a tax only on foreign goods and services, not on the equivalent domestically produced goods and services. They said it also amounts to “double taxation,” because it would effectively tax the profits of non-US-resident companies — after they already paid taxes on those same profits in their home countries.

“Bearing in mind that almost half of transatlantic trade is intra-company trade, this risks seriously hampering genuine trade and investment flows between our two economies,” they wrote.

Base erosion tax

Second, the Senate bill featured a “base erosion and anti-abuse tax” (BEAT) provision. “Base erosion,” or more properly “base erosion and profit shifting” (BEPS), is a technical term referring to various accounting schemes corporations use to legally shift profits from where they’re earned, to ultra-low tax jurisdictions.

To take a common example: Multi-national corporations often establish their formal headquarters in a tax haven, assign their intellectual property to that headquarters, and then establish contracts requiring all the company’s foreign subsidiaries to pay an exorbitant “licensing fee” for the use of the corporate logo or other corporate intellectual property.

The licensing fee is set at a rate that cancels out the net revenues of the subsidiary corporations, leaving them paying no taxes in the countries where they actually produce or sell goods or services. The net effect of this “profit shifting” scheme is the erosion of the tax base of these countries — hence “base erosion.”

Base erosion — or protectionism?

The EU finance ministers said that: “Preventing base erosion is an important goal,” but “the provision appears to have the potential of being extremely harmful for the international banking and insurance business, as cross-border intra-group financial transactions would be treated as non-deductible and subject to a 10 percent tax. This may … harmfully distort international financial markets.”

The finance ministers concluded that “some of the proposed measures could constitute unfair trade practice and may discourage non-US financial institutions from operating in the US.”

Lower taxes on income from intangibles

Finally, the Europeans criticized a proposal in the Senate bill for a preferential tax regime for “foreign-derived intangible income.”

In essence, when US companies earn income outside the US via licensing fees, those fees would be taxed at a reduced corporate tax rate of 12.5 percent (compared to a proposed 21 percent federal tax rate for other corporate profits).

The Europeans wrote that this would subsidize exports compared with domestic consumption, and could face challenges as an illegal export subsidy under WTO rules.

Moreover, “the design of the [proposed] regime is notably different from accepted IP [intellectual property] regimes by providing a deduction for income derived from intangible assets other than patents and copyright software, such as branding, market power, and market-related intangibles.”

Legitimate concerns

Are the criticisms from Europe justified? In a word: Yes, according to the experts consulted by DW.

Clemens Fuest, the president of the Ifo Institute for Economic Research in Munich, said: “The European Commission’s criticism of the US tax plans is justified. The proposed measures would disrupt international trade and lead to double taxation.”

Tobias Hentze, an economist at the German Economic Institute in Cologne, told DW that he was worried the tax reforms could be the spark for the next round of a “race-to-the-bottom” of jurisdictions competing to offer corporations ever-lower tax rates. 

If the reforms go through, Hentze said, the US will go from being a high-tax to a low-tax country. Until now, the tax burden on companies has been significantly higher in the US, with a tax rate of 39 percent, compared to 30 in Germany or 34 in France. 

America First, again

The US also proposes to play unfairly by taxing profits that have already been taxed in Europe, Hentze said, concluding: “The underlying message to multinational companies is: If you produce here in the US, you will be spared the double taxation.”

The reform package provides further incentives for companies, too. With the creation of a so-called patent box, US legislators want to incentivize companies like Apple to register their patents and trademarks in the US, by means of a preferential tax rate on profits generated (12.5 percent). A fair tax regime, in Hentze’s view, should not offer tax rebates for certain types of profits.

“However, countries like Ireland or the Netherlands already do that too,” Hentze pointed out. “Therefore, the indignation of EU finance ministers is not very credible on this particular point.”