Republican Tax Bill Passes House; Senate Vote Pending
The Republican-controlled House of Representatives passed a historic tax bill Tuesday afternoon that will reduce corporate taxation and simplify the individual tax code.
Tax Reform Achieved
The bill, which amounts to $1.5 trillion in savings, was approved on a vote of 227-203. Twelve Republicans and all 191 Democrats voted against it.
Tax reform was one of President Trump’s main priorities on the campaign trail, and was one of the first items the administration put through legislation. After a lengthy debate, including dissent from within the GOP party, Republicans managed to set aside their differences in time to implement the new legislation on Jan. 1, 2018. Tax reform also gives the Trump administration the momentum it needs to push the rest of its agenda next year.
A final Senate vote is expected Tuesday night, which would grant President Trump the ability to sign the package imminently. The new legislation has been dubbed the Tax Cuts And Jobs Act.
Both houses of Congress tweaked respective versions of the tax bill to reach a conclusion on Tuesday. Under the new bill, the corporate tax rate will be reduced to 21% from 35%. A 20% deduction will also be given to many pass-through businesses.
House Speaker Paul Ryan said the new bill will “help hard-working Americans who have been left behind for too long,” adding that the average family would receive $2,059 in tax cuts next year.
President Trump took to Twitter Tuesday afternoon to congratulate Paul Ryan, Kevin McCarthy, Kevin Brady, Steve Scalise and Cathy McMorris Rodgers for getting the deal done.
Stocks Fail to Rally
The initial reading of the Tax Cuts And Jobs Act failed to lift U.S. stocks on Tuesday, as investors pared back their exuberance. Expectations of imminent tax reform lifted Wall Street to record highs at the start of the week.
The large-cap S&P 500 Index fell 0.3% to close at 2,681.47. Seven of 11 S&P 500 sectors finished in negative territory, with utilities and real estate posting the heaviest losses.
Meanwhile, the Dow Jones Industrial Average closed down 37.45 points, or 0.2%, to 24,754.75. The technology-driven Nasdaq Composite Index settled down 0.4% at 6,963.85.
All three indexes settled in record territory Monday.
A measure of implied volatility known as the CBOE VIX rose for a second consecutive session and closed in double-digits for the first time in five days. The so-called “fear index” climbed 5.3% to finish at 10.03.
In currencies, the U.S. dollar declined against a basket of world peers as the post-FOMC rally continued to fade. The U.S. dollar index (DXY) was last down 0.3% at 93.45.
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