Danny McCance 14 Dec 2017 12:58pm

Republicans reach deal on corporation tax cuts

The latest agreement on tax reforms means that corporation tax in the US could be cut from 35% to 21%

After publishing slightly different bills earlier this month, Republicans in both the Senate and the House of Representatives came to the agreement, which was 1% above the initially proposed cut to 20%.

The vote is likely to happen next week; however, as a result of the shock democratic victory in the Alabama Senate race on Tuesday, senior democrat senator Chuck Schumer has called for the vote to be postponed.

“It would be wrong for senate republicans to jam through this tax bill without giving the newly elected senator from Alabama the opportunity to cast his vote,” said Schumer, according to the Financial Times.

On Tuesday, democrat Doug Jones unexpectedly beat rival republican Roy Moore to take the senate seat for the republican stronghold, becoming the first democratic senator in the state since 1992.

The result also means that the republican senate majority has decreased by one to 51-49.

Other measures in the tax bills are cuts for the wealthy, with the top income tax rate being decreased to 37% from 39.6% for those earning more than $500,000 (£371,825) a year.

Although the bill has been criticised for favouring the wealthy and large businesses, it would still leave the level of corporation tax in the US higher than in the UK.

Currently in the UK the corporation tax rate is 19% but by 2020 this will fall to 17%, the lowest among G20 nations.

In October, US president Donald Trump was accused of lying by Ireland prime minister Leo Varadkar after he claimed that Ireland planned to reduce its corporation tax from 12% to 8%.