New tax bill could leave US with huge debt in the long term
Republicans and Democrats reach deal on tax bill
In a scramble to score a legislative win, US President Donald Trump and the Republican Party are rushing through a tax Bill that, while likely to spur growth in the short term, may well leave the US saddled with a bloated national debt in the long term.
Democrats and Republicans working to reconcile two versions of the Bill reached a deal on Wednesday.
Republicans have accused the Democrats of obstructionism.
A major feature of the Bill is a corporate tax rate cut - from the current 35 per cent to 21 per cent - designed to restore America's global competitiveness.
Business sectors have widely welcomed the cuts.
As they finalised the biggest tax overhaul in 30 years, Republicans also wavered for weeks on whether to slash the top income tax rate for the wealthy.
In the end, they agreed to cut it to 37 per cent from the current 39.6 per cent.
On Wednesday, Mr Trump, flanked by a selection of middle-class families from across America who would benefit from tax cuts, made a strong pitch for the Bill - the most sweeping tax reform and reduction legislation in decades - to be ready by Christmas.
"As a candidate, I promised we would pass a massive tax cut for the everyday working American families who are the backbone and the heartbeat of our country," he said.
"Now we are just days away from keeping that promise. We want to give you, the American people, a giant tax cut for Christmas."
The Internal Revenue Service had informed him that if the Bill were to be signed into law by Christmas, tax cuts would start taking effect from February pay cheques, he added.
Opinion in the US is sharply divided. Polls show that most Americans believe the tax cuts will end up benefiting only the wealthy.
On Wednesday, Mr Trump tried to counter that narrative.
Family after middle-class family, dressed in their best for the occasion at the White House, spoke briefly about how they would use the savings from the tax cuts.
"People may be excited about the idea of a couple of thousand dollars in the form of a tax cut and be less aware of the damage created by the higher national debt," Ms Maya MacGuineas, president of the bipartisan non-profit Committee for a Responsible Federal Budget, told The Straits Times over the phone.
"On the one hand, people are evaluating how this will affect them in terms of tax cuts. On the other hand, the purpose is to grow the economy.
"The question is how much growth and who will receive that growth, and how will it be spread.
"Growth is good for everybody, but it is certainly likely to disproportionately help the more well-off," she said.
"The third aspect is the uncounted downside. It's going to add, after economic growth, a trillion dollars to the national debt."