GM CEO Barra, Ivanka Trump talk jobs in a 2020 battleground

By Joseph White

WARREN, Mich. (Reuters) – General Motors Co Chief Executive Mary Barra hosted Ivanka Trump, daughter and adviser to U.S. President Donald Trump, for a tour on Wednesday of a GM worker training center in one of the hottest battlegrounds of the U.S. presidential race.

GM and White House officials said the meeting at GM’s technical center in Warren, Michigan, was scheduled long ago, and was not a political event.

Still, the campaign context behind the location, the subject – manufacturing jobs – and the timing of the visit was inescapable.

Warren is in Macomb County, north of Detroit, which will be pivotal to winning Michigan’s electoral votes in November. Preserving U.S. manufacturing jobs has been a focus of President Trump’s administration since its first day.

Big U.S. corporations face a challenge during a charged campaign season. Barra and GM have not endorsed a candidate in the presidential contest, and will not, company officials said. Still, GM has much at stake in policy decisions Trump – or his successor – will make on issues such as tailpipe emissions, autonomous vehicle safety rules, trade and taxes.

GM is among several corporations supporting White House programs to promote investments in worker training. Ivanka Trump is leading those efforts, including an advertising campaign called “Find Something New.”

Among the students in the GM program who met with Barra and Trump was Zephirin Hunt, who started with GM as a temporary worker at the automaker’s Flint truck assembly plant. Now, Hunt said, he is a skilled trades worker at an assembly plant near Lansing, Michigan, pursuing a course of training in electronic machine and robot controls. “Every 890 hours,” of training, “we get a raise,” Hunt said.

GM and Barra have had an up and down relationship with the president, who attacked Barra and the automaker for a November 2018 decision to close an assembly plant in Lordstown, Ohio. That shutdown was part of a broader retrenchment at GM in 2019 that resulted in the closure of a transmission plant in Warren, and thousands of layoffs at the GM technical center.

Trump has also blasted GM for investing in China, and criticized the company earlier this year during a negotiation that led to GM building ventilators in response to the COVID-19 pandemic.

GM has sided with Trump in a legal fight with the state of California over its authority to set stiffer vehicle emissions standards than those established by the U.S. government, however.

(Reporting by Joe White in Warren, Additional reporting by David Shepardson in Washington; Editing by Tom Brown)

U.S. spending deal would raise tobacco age, deny some of Trump border wall funding

By Richard Cowan and Susan Cornwell

WASHINGTON (Reuters) – Congress would raise the U.S. tobacco purchasing age to 21 and permanently repeal several of the Affordable Care Act’s (ACA) taxes under a massive government spending bill due to be released later on Monday, congressional sources said.

Republican and Democratic lawmakers hope to pass the $1.4 trillion spending bill before current government funding runs out on Saturday, to avoid a partial government shutdown and head off the kind of messy budget battle that resulted in a record 35-day interruption of government services late last year and early this year.

The legislation, worked out during weeks of negotiations between leading lawmakers and the Trump administration, denies President Donald Trump the spending increase he has sought to build his signature wall along the U.S.-Mexico border.

Most Democrats and some Republicans support a mix of improved physical barriers at the border, along with a combination of high-tech surveillance equipment and patrols by all-terrain vehicles and even horses.

They have mostly rejected Trump’s calls for at least $24 billion over the long run to build his much-touted wall, which he originally said Mexico would finance. Mexico rejected that idea. The wall’s price tag could escalate as the federal government is forced to acquire private lands for construction.

The crackdown on youth smoking, by changing the minimum age for cigarette and other tobacco purchases to 21 from the current 18, would give the Food and Drug Administration six months to develop regulations. The agency would then have three years to work with states on implementing the change.

The largest expenditures in the bill is for the Department of Defense, which would get a total of $738 billion for this year, $22 billion more than last year. It does not include “mandatory” programs, such as Social Security and Medicare, which are funded separately.

The legislation also includes $425 million in additional federal grants to help local governments prepare for the November 2020 presidential and congressional elections.

Some of the money would be used to harden infrastructure against cyber attacks following election meddling by Russia in 2016.

Negotiators settled on $7.6 billion for conducting next year’s census, which is done once every 10 years. That would be $1.4 billion more than Trump proposed.

The bill also allocates $25 million for federal gun violence research, following a decades-long suspension of such funding.

All of the money would fund government programs through Sept. 30, 2020.

The legislation would repeal several taxes originally created to help fund the ACA, popularly known as Obamacare, that had been delayed or were only intermittently in effect.

It calls for a permanent repeal of the so-called “Cadillac tax,” a 40% tax on generous health insurance plans.

It had been intended to encourage corporations to buy lower cost plans for employees but was opposed by many unions that had negotiated their health insurance plans and by businesses who said it was a benefit workers valued. The tax was delayed and never went into effect.

The spending bill would also repeal the 2.3% tax on the sale of medical devices such as catheters and pacemakers. This drew opposition from bipartisan lawmakers who said it hurt innovation at medical device companies.

Another tax to be repealed is an industry-wide health insurance fee of about 2.5% to 3% of premiums collected.

(This version of the story has been refiled to add dropped word “not” in seventh paragraph)

(Reporting by Susan Cornwell and Richard Cowan; Editing by Andy Sullivan, Chizu Nomiyama and Bill Berkrot)

To quell unrest, France’s Macron speeds up tax cuts but vows no U-turn

French President Emmanuel Macron speaks during a special address to the nation, his first public comments after four weeks of nationwide 'yellow vest' (gilet jaune) protests, at the Elysee Palace, in Paris, France December 10, 2018. Ludovic Marin/Pool via REUTERS

By Michel Rose and John Irish

PARIS (Reuters) – President Emmanuel Macron on Monday announced wage rises for the poorest workers and tax cuts for pensioners in further concessions meant to defuse weeks of often violent protests that have challenged his authority.

In his first national address following two weekends of France’s worst unrest for years, Macron sought to restore calm and struck a humble tone after accusations that his governing style and economic policies were fracturing the country.

But he refused to reinstate a wealth tax and to back down on his reform agenda, which he said would proceed in 2019 with overhauls of pensions, unemployment benefits and public expenditures.

“We will respond to the economic and social urgency with strong measures, by cutting taxes more rapidly, by keeping our spending under control, but not with U-turns,” Macron said in the 13-minute TV address from the Elysee Palace.

Protesters wearing yellow vests watch French President Emmanuel Macron on a computer screen in Sainte-Eulalie, France, December 10, 2018. REUTERS/Regis Duvignau

Protesters wearing yellow vests watch French President Emmanuel Macron on a computer screen in Sainte-Eulalie, France, December 10, 2018. REUTERS/Regis Duvignau

His response came 48 hours after protesters fought street battles with riot police, torching cars and looting shops – the fourth weekend of protests for the so-called “yellow vest” movement which started as a revolt against high fuel costs.

In measures that are likely to cost billions to state coffers, Macron said people on the minimum wage would see their salaries rise by 100 euros a month in 2019 without extra costs to employers.

His labor minister said this would be achieved by the government topping up small salaries.

Pensioners earning less than 2,000 euros will see this year’s increase in social security taxes scrapped, Macron said, going back on a measure that had particularly hurt his popularity with older voters.

“The effort we asked for was too big and was not fair.”

Asked whether the budget deficit would be kept below the EU limit of 3 percent, an Elysee official said France had some wiggle room on spending if a one-off tax rebate, which inflates its deficit by 20 billion euros in 2019, was not taken into account.

Macron faced a delicate task: he needed to persuade the middle class and blue-collar workers that he heard their anger over a squeeze on household spending, without being exposed to charges of caving in to street politics.

The 40-year old former investment banker was also under pressure to make amends about cutting remarks he made in the past year and a half that critics said made him look aloof and arrogant.

“No doubt over the past year and a half we have not provided answers that were strong and quick enough. I take my share of responsibility,” he said.

“I may have given the impression that I did not care about that, that I had other priorities. I also know that I have hurt some of you with my words.”

Political opponents, who have largely failed so far to tap into the discontent from the leaderless “yellow vest”, criticized Macron’s response as insufficient.

“Emmanuel Macron thought he could hand out some cash to calm the citizen’s insurrection that has erupted,” Jean-Luc Melenchon, leader of the far-left La France Insoumise, said.

“I believe that Act V (of the protests) will play out on Saturday,” he said referring to a new round of protests planned this weekend.

One of the faces of the “yellow vest” movement appeared unconvinced as well.

“In terms of substance, these are half measures. We can feel that Macron has got a lot more to give,” Benjamin Cauchy, who met the French leader last week, told France 2 television.

 

(Additional reporting by Geert de Clercq, Caroline Pailliez, Richard Lough, Leigh Thomas, Pascale Denis, Jean-Baptiste Vey, Marine Pennetier in Paris and Dhara Ranasinghe in London, Editing by Mark Heinrich)

Macron makes U-turn on fuel-tax increases in face of ‘yellow vest’ protests

French Prime Minister Edouard Philippe attends the questions to the government session at the National Assembly in Paris, France, December 4, 2018. REUTERS/Gonzalo Fuentes

By Simon Carraud and Michel Rose

PARIS (Reuters) – France’s prime minister on Tuesday suspended planned increases to fuel taxes for at least six months in response to weeks of sometimes violent protests, the first major U-turn by President Emmanuel Macron’s administration after 18 months in office.

In announcing the decision, Prime Minister Edouard Philippe said anyone would have “to be deaf or blind” not to see or hear the roiling anger on the streets over a policy that Macron has defended as critical to combating climate change.

“The French who have donned yellow vests want taxes to drop, and work to pay. That’s also what we want. If I didn’t manage to explain it, if the ruling majority didn’t manage to convince the French, then something must change,” said Philippe.

“No tax is worth jeopardizing the unity of the nation.”

Along with the delay to the tax increases that were set for January, Philippe said the time would be used to discuss other measures to help the working poor and squeezed middle-class who rely on vehicles to get to work and go shopping.

Earlier officials had hinted at a possible increase to the minimum wage, but Philippe made no such commitment.

He warned citizens, however, that they could not expect better public services and lower taxes.

“If the events of recent days have shown us one thing, it’s that the French want neither an increase in taxes or new taxes. If the tax-take falls then spending must fall because we don’t want to pass our debts on to our children. And those debts are already sizeable,” he said.

The so-called “yellow vest” movement, which started on Nov. 17 as a social-media protest group named for the high-visibility jackets all motorists in France carry in their cars, began with the aim of highlighting the squeeze on household spending brought about by Macron’s taxes on fuel.

However, over the past three weeks, the movement has evolved into a wider, broadbrush anti-Macron uprising, with many criticizing the president for pursuing policies they say favor the rich and do nothing to help the poor.

Despite having no leader and sometimes unclear goals, the movement has drawn people of all ages and backgrounds and tapped into a growing malaise over the direction Macron is trying to take the country in. Over the past two days, ambulance drivers and students have joined in and launched their own protests.

After three weeks of rising frustration, there was scant indication Philippe’s measures would placate the “yellow vests”, who themselves are struggling to find a unified position.

“The French don’t want crumbs, they want a baguette,” ‘yellow vest’ spokesman Benjamin Cauchy told BFM, adding that the movement wanted a cancellation of the taxes.

Another one, Christophe Chalencon, was blunter: “We’re being taken for idiots,” he told Reuters, using a stronger expletive.

GREEN GOALS

The timing of the tax U-turn is uncomfortable for Macron. It comes as governments meet in Poland to try to agree measures to avert the most damaging consequences of global warming, an issue Macron has made a central part of his agenda. His carbon taxes were designed to address the issue.

But the scale of the protests against his policies made it almost impossible to plow ahead as he had hoped.

While the “yellow vest” movement was mostly peaceful to begin with, the past two weekends have seen outpourings of violence and rioting in Paris, with extreme far-right and far-left factions joining the demos and spurring chaos.

On Saturday, the Arc de Triomphe national monument was defaced and avenues off the Champs Elysees were damaged. Cars, buildings and some cafes were torched.

The unrest is estimated to have cost the economy millions, with large-scale disruption to retailers, wholesalers, the restaurant and hotel trades. In some areas, manufacturing has been hit in the run up to Christmas.

CHANGE FRANCE?

Macron, a 40-year-old former investment banker and economy minister, came to office in mid-2017 promising to overhaul the French economy, revitalize growth and draw foreign investment by making the nation a more attractive place to do business.

In the process he earned the tag “president of the rich” for seeming to do more to court big business and ease the tax burden on the wealthy. Discontent has steadily risen among blue-collar workers and others who feel he represents an urban “elite”.

For Macron, who is sharply down in the polls and struggling to regain the initiative, a further risk is how opposition parties leverage the anger and the decision to shift course.

Ahead of European Parliament elections next May, support for the far-right under Marine Le Pen and the far-left of Jean-Luc Melenchon has been rising. Macron has cast those elections as a battle between his “progressive” ideas and what he sees as their promotion of nationalist or anti-EU agendas.

Le Pen was quick to point out that the six-month postponement of the fuel-tax increases took the decision beyond the European elections.

(Additional reporting by Marine Pennetier, Elizabeth Pineau and Richard Lough, John Irish; Writing by Luke Baker; Editing by Richard Balmforth)

IRS gives taxpayers one-day extension after computer glitch

A general view of the U.S. Internal Revenue Service (IRS) building in Washington May 27, 2015. REUTERS/Jonathan Ernst

WASHINGTON (Reuters) – The U.S. Internal Revenue Service said it would give taxpayers an additional day to file their 2017 returns after computer problems prevented some people from filing or paying their taxes ahead of Tuesday’s midnight deadline.

“Taxpayers do not need to do anything to receive this extra time,” the IRS said in a statement announcing the extension.

The agency said its processing systems were now back online.

Earlier, the agency said several systems were hit with the computer glitch, including one that handles some returns filed electronically and another that accepts online tax payments using a bank account.

The IRS said it believed the problem was a hardware issue and “not other factors.”

It was not clear how many taxpayers might have been affected, but the agency said it received 5 million tax returns on the final day of filing season last year.

“This is the busiest tax day of the year, and the IRS apologizes for the inconvenience this system issue caused for taxpayers,” acting IRS Commissioner David Kautter said in a statement.

The agency said taxpayers should continue to file their taxes as normal on Tuesday evening – whether electronically or on paper.

Taxpayers could also ask for six-month extensions, as President Donald Trump did. The White House said on Tuesday that Trump, because of the complexity of his tax returns, would file his by Oct. 15.

(Reporting by Eric Beech; Editing by Diane Craft and Chris Reese)

Jerusalem’s Church of Holy Sepulchre to reopen after protest

A general view of the entrance and the closed doors of the Church of the Holy Sepulchre in Jerusalem's Old City, February 25, 2018. REUTERS/Amir Cohen

JERUSALEM (Reuters) – Jerusalem’s Church of the Holy Sepulchre, revered as the site of Jesus’s crucifixion and burial, will reopen its doors after Israel backtracked on Tuesday from a tax plan and draft property legislation that triggered a three-day protest.

The rare decision on Sunday by church leaders to close the ancient holy site, a favorite among tourists and pilgrims, with the busy Easter holiday approaching put extra pressure on Israel to re-evaluate and suspend the moves.

After receiving a statement from the office of Israeli Prime Minister Benjamin Netanyahu, Roman Catholic, Greek Orthodox and Armenian clergy said the church would reopen Wednesday morning.

An Israeli committee led by cabinet minister Tzachi Hanegbi will negotiate with church representatives to try to resolve the dispute over plans to tax commercial properties owned by the church in Jerusalem, Netanyahu’s statement said.

Church leaders, in a joint statement, welcomed the dialogue.

“After the constructive intervention of the prime minister, the churches look forward to engage with Minister Hanegbi, and with all those who love Jerusalem to ensure that our holy city, where our Christian presence continues to face challenges, remains a place where the three monotheistic faiths (Judaism, Islam and Christianity) may live and thrive together.”

The Jerusalem Municipality, Netanyahu said, would suspend the tax collection actions it had taken in recent weeks.Mayor Nir Barkat has said the churches owed the city more than $180 million in property tax from their commercial holdings, adding that “houses of worship” would remain exempt.

Church leaders, in closing the Church of the Holy Sepulchre, said church-owned businesses, which include a hotel and office space in Jerusalem, had enjoyed a tax exemption.

While the review is under way, work on legislation that would allow Israel to expropriate land in Jerusalem that churches have sold to private real estate firms in recent years will also be suspended, Netanyahu said.

The declared aim of the bill, deemed “abhorrent” in a prior statement issued by church leaders, is to protect homeowners against the possibility that private companies will not extend their leases of land on which their houses or apartments stand.

The churches are major landowners in Jerusalem. They say such a law would make it harder for them to find buyers for church-owned land – sales that help to cover operating costs of their religious institutions.

A spokesman for Palestinian President Mahmoud Abbas called on Israel to permanently cancel the proposed measures, which he said would “lead to escalating tension and to instability”.

A small minority of Palestinians are Christians, many of them in Bethlehem, the town in the Israeli-occupied West Bank – near Jerusalem – where Jesus is believed to have been born.

(Reporting by Ori Lewis, Mustafa Abu Ghaneyeh and Nidal al-Mughrabi; writing by Jeffrey Heller; editing by Mark Heinrich)

Wall St. set to rise at open as tax reform enters last lap

Wall St. set to rise at open as tax reform enters last lap

By Rama Venkat Raman

(Reuters) – Wall Street was poised to open higher on Thursday, aided by gains for banking shares and news that the Republicans’ tax code overhaul should face final votes in Congress before the year-end.

A final bill could be formally unveiled on Friday, with decisive votes expected next week in both chambers.

On Wednesday, Republicans in the Senate and the House reached a deal on final tax legislation, paving the way for final votes next week on a package that would slash the corporate tax rate to 21 percent.

“We have a pretty positive background, investors are focused on the tax deal that they are closed to an agreement between the House and the Senate,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.

“It will take some time to go through the details, what that means for specific companies but it’s consistent with the general positive tone.”

Traders also focused on a $52.4 billion stock deal between Walt Disney <DIS.N> and Twenty-First Century Fox <FOXA.O>.

Shares of media baron Rupert Murdoch’s Fox fell marginally in choppy trading after Walt Disney agreed to buy the Fox’s film, television and international businesses. Disney shares were also down 0.9 percent.

Goldman Sachs <GS.N>, JPMorgan <JPM.N>, Wells Fargo <WFC.N> and Bank of America <BAC.N> rose between 0.52 percent and 0.86 percent ahead of market open.

Shares of big banks recovered early in the day from an initial decline after the Federal Reserve raised rates by 25 basis points but kept its outlook for 2018 and 2019 unchanged.

At 8:34 a.m. ET (1334 GMT), Dow e-minis <1YMc1> were up 32 points, or 0.13 percent, with 8,450 contracts changing hands.

S&P 500 e-minis <ESc1> were up 1.5 points, or 0.06 percent, with 69,766 contracts traded.

Nasdaq 100 e-minis <NQc1> were up 6 points, or 0.09 percent, on volume of 7,313 contracts.

U.S. retail sales increased more than expected in November as the holiday shopping season got off to a brisk start, pointing to sustained strength in the economy.

A Commerce Department report showed retail sales rose 0.8 percent in November, while economists polled by Reuters has forecast a 0.3 percent rise.

Among other big movers, Express Scripts <ESRX.O> gained about 2 percent after pharmacy benefit manager forecast full-year 2018 earnings that topped analysts’ expectations.

U.S.-listed shares of Valeant Pharmaceuticals <VRX.N> fell 4.2 percent after JPMorgan cut the stock’s rating to ‘underweight’.

Israel-based drugmaker Teva Pharmaceutical’s <TEVA.N> shares soared 15 percent after the company announced job cuts, asset sale and dividend suspension in an overhaul to pay back debt.

(Reporting by Rama Venkat Raman in Bengaluru; Editing by Arun Koyyur)

Congress secures tax deal, Trump backs 21-percent corporate rate

Congress secures tax deal, Trump backs 21-percent corporate rate

By David Morgan and Amanda Becker

WASHINGTON (Reuters) – Congressional Republicans have reached a deal on final tax legislation, the U.S. Senate’s top Republican tax writer said on Wednesday, with President Donald Trump saying he would back a sharply lowered corporate tax rate of 21 percent.

The 21 percent rate would be slightly above a proposed 20-percent rate that Trump supported earlier, but still far below the present headline rate of 35 percent, a deep tax cut that U.S. corporations have been seeking for years.

As they finalized the biggest tax overhaul in 30 years, Republicans for weeks wavered on slashing the top income tax rate for the rich, but finally agreed to do it, despite Democrats’ criticism that the bill favors the wealthy and corporations, while offering little to the middle class.

The emerging congressional agreement includes a 21-percent corporate rate; a top individual income tax rate of 37 percent, down from the current 39.6 percent level; and a $10,000 cap on deducting state and local property or income tax payments, said sources familiar with the negotiations.

Although the president said a “final number” on the corporate rate had not been set, the Senate and House of Representatives were hurtling toward an agreement that would clear the way for final votes in both chambers next week.

“I think we’ve got a pretty good deal,” Senate Finance Committee Chairman Orrin Hatch told reporters as he prepared to join other Republicans for lunch with Trump.

Hatch’s remarks appeared to reinforce expectations that a final vote could begin in the Senate as early as Monday. Further details of the agreed legislation were not yet available.

Republicans have been urgently trying to finalize details of their bill without increasing its estimated impact on the federal deficit. As drafted, it is expected to add as much as $1.5 trillion to the $20-trillion national debt over 10 years.

At a tax event held by Democrats, Moody’s Analytics Chief Economist Mark Zandi said the Republican bill, if enacted, would cause interest rates to rise, meaning the benefits of a lower corporate tax rate would be “completely washed out.”

Stock markets have rallied for months in anticipation of lower taxes for businesses. The benchmark Dow Jones Industrial Average Index <.DJI> was up 0.5 percent at 24,628 in afternoon trading.

“The market is trading at all-time highs, its run-up has been really in anticipation of tax reform,” said Ken Polcari, NYSE floor division director at O’Neil Securities in New York.

CORKER UNDECIDED

Republican Senator Bob Corker, a fiscal hawk, on Wednesday said he was undecided on whether to support the bill. He told reporters: “My deficit concerns have not been alleviated.”

Asked at the lunch by reporters if he would sign a bill with a 21-percent corporate tax rate, Trump said: “I would … It’s very important for the country to get a vote next week.”

With their defeat on Tuesday in an Alabama special Senate election, Republicans were under increased pressure to complete their tax overhaul before Christmas and before a new Democratic Alabama senator can be formally seated in the Senate.

Democrat Doug Jones’ capture of the Alabama Senate seat came hours ahead of the final tax agreement being hammered out.

When Jones, who upset Republican Roy Moore in the deeply conservative Southern state, arrives in Washington, the Republicans’ already slim Senate majority will narrow to 51-49, further complicating Trump’s legislative agenda.

Fast action by Republicans on taxes would prevent Jones from upsetting the expected vote tallies on this bill since he will not likely be seated until late December or early January.

Senate Democratic Leader Chuck Schumer called on Republicans to delay a vote on overhauling the tax code for the first time in 30 years until Jones can be seated, but that was unlikely.

A one-percentage-point change in the corporate rate would give tax writers about $100 billion of revenues over a decade that could be used in many ways. One could be to repeal a federal tax on inheritances paid by wealthy Americans. Another might be to end the corporate alternative minimum tax.

Some Republicans also wanted a slightly higher corporate rate to pay for a higher child tax credit. Lawmakers had also debated capping a popular individual deduction for mortgage interest at $750,000 in home loan value, instead of $1 million.

If Trump can sign a tax bill by the end of the year, it would be the first major legislative victory for him and the Republicans since they took control of the White House and both chambers of Congress in January.

After his lunch with Republican lawmakers, Trump will speak on tax legislation alongside five middle class families who would benefit, senior administration officials said.

He wants to try to counter claims that the Republican tax plan would largely benefit corporations and the wealthy.

The nonpartisan Joint Committee on Taxation and Congressional Budget Office have both said wealthier taxpayers would gain disproportionately from the Republican proposals.

(Additional reporting by Jeff Mason, Steve Holland, Susan Cornwell, Richard Cowan, Makini Brice and Doina Chiacu; Editing by Kevin Drawbaugh and James Dalgleish)

Trump to make final tax push as Republican negotiators near deal

Trump to make final tax push as Republican negotiators near deal

By Amanda Becker and Steve Holland

WASHINGTON (Reuters) – U.S. President Donald Trump will make a final push on Wednesday to shepherd a Republican tax overhaul across the finish line, hosting congressional negotiators for lunch before a speech in which he will make closing arguments for the legislation.

Republican tax writers from the Senate and House of Representatives worked into Tuesday evening to reconcile differences between the separate plans passed by each chamber, as important details, including a final corporate tax rate, remained in flux.

Republican leaders are aiming to vote on the sweeping legislation before Christmas. That timetable became more crucial after Tuesday’s upset win by Democrat Doug Jones over Republican Roy Moore in Alabama’s special U.S. Senate election.

Jones’ victory trims the Republicans’ already narrow Senate majority to 51-49, which could make it more difficult for them to push through legislation.

Senate Democratic Leader Chuck Schumer on Wednesday will call on Republicans to delay the tax vote until the newest senator can be seated, likely in early January.

Republicans were still trying to finalize important details without increasing the deficit impact of legislation, which could add as much as $1.5 trillion to the national debt over the next decade, according to independent estimates.

Both House and Senate bills proposed slashing the corporate rate to 20 percent from 35 percent, but negotiators were discussing on Tuesday whether to raise that rate to 21 percent in the final bill, lawmakers said.

Tax writers were also still determining a top rate for individual taxpayers and weighing how to best scale back popular individual deductions for mortgage interest and local tax payments that the Senate and House bills treated differently.

“We’re still talking,” No. 2 Senate Republican John Cornyn said late Tuesday of a possible 21 percent corporate rate.

Trump is seeking to sign a tax bill by the end of the year to achieve Republicans’ first major legislative victory since they took control of both chambers of Congress and the White House in January.

After hosting Republican lawmakers for lunch, Trump will deliver his speech on tax legislation alongside five middle class families who would benefit, senior administration officials said.

He was expected to counter claims the Republican tax plan would largely benefit corporations and the wealthy by highlighting how it would also cut rates for lower- and middle-income taxpayers, who could see additional benefits, such as higher wages, result from the corporate rate cut, the officials said.

Independent government analyses by the nonpartisan Joint Committee on Taxation, which assists congressional tax writers, and the Congressional Budget Office, which examines the budget impact of legislation, both concluded that wealthier taxpayers would disproportionately benefit from the Republican proposals.

When asked who stands to benefit most from Republican tax legislation, more than half of American adults selected either the wealthy or large U.S. corporations, according to a Reuters/Ipsos poll released on Monday.

(Additional reporting by Susan Cornwell, Richard Cowan, Doina Chiacu; Editing by Cynthia Osterman and Steve Orlofsky)

Senate poised for vote on tax bill negotiations with House

Senate poised for vote on tax bill negotiations with House

By David Morgan and Amanda Becker

WASHINGTON (Reuters) – A top U.S. Senate Republican voiced optimism that congressional negotiators will reach a deal on a sweeping tax overhaul ahead of a Dec. 22 deadline, as senators prepared to vote on Wednesday to authorize talks with the House to bridge differences between their rival bills.

The Republican-led House of Representatives and Senate must work out differences on issues ranging from business taxes to the repeal of the Obamacare mandate that Americans obtain health insurance or face a penalty before lawmakers can pass a final version.

A Senate measure to go to a conference with the House, which is widely expected to pass, follows similar House action this week. Senate aides said the vote would be held at 3 p.m. (2000 GMT).

John Cornyn, the No. 2 Senate Republican, said he was optimistic House and Senate tax negotiators would be able to work out an agreement before their self-imposed Dec. 22 deadline to send the bill to Republican President Donald Trump to sign into law.

“Given the similarities between the House and the Senate bills, I think there are some obvious targets where they need to focus their attention but obviously they won’t be rewriting the bills,” Cornyn said.

While there are significant differences between the House and Senate versions, both would deliver deep cuts in corporate income taxes and tax benefits to the wealthiest Americans as well as tax cuts to many middle-income people.

Passage of the tax bill would provide a badly needed legislative victory for Trump and Republicans after their failure earlier this year to enact legislation repealing President Barack Obama’s signature healthcare law.

Trump and Republicans see enacting the tax overhaul that they promised voters as crucial to their strategy for the 2018 U.S. congressional elections, when all 435 seats in the House of Representatives and 33 seats in the 100-member Senate will be up for election.

Democrats have been united against the bill, calling it a handout to corporations and the rich that would drive up the federal deficit.

Potential sticking points in the two versions of the legislation include the Senate’s decision to retain alternative minimum taxes for corporations and individuals. The House version repealed both taxes.

The bills also differ on their treatment of so-called pass-through enterprises including small businesses, the expensing of business capital investments, international corporate taxes, mortgage deductions and the child tax credit.

Republicans will also have to resolve a difference on the corporate income tax rate. Both chambers cut the rate to 20 percent from 35 percent, but the Senate’s bill delays the cut for a year.

The march toward passing tax legislation faced a risk earlier this week of becoming enmeshed in House Republican infighting over a separate spending measure. Members of the conservative House Freedom Caucus had threatened to vote against conference negotiations to gain leverage in the discussions with Republican leaders over the spending bill.

But House Freedom Caucus members have since vowed to insulate tax legislation from the politics of spending.

“We’ve got to get across the finish line on tax reform. Any distraction from that is a problem,” House Freedom Caucus Chairman Mark Meadows told reporters.

(Additional reporting by Richard Cowan; Editing by Caren Bohan and Will Dunham)