Despite last-minute snag, U.S. tax overhaul passes Senate, heads back to House

The U.S.Senate approved sweeping tax legislation in the pre-dawn hoursof Wednesday, sending the tax cut package back to the House ofRepresentatives for a final vote later in the day.

The drive by the Republicans to approve thebiggest tax code rewrite in 30 years hit a snag earlier in the day, requiring another votein the House Wednesday and delaying what would be their first major legislative win under President Donald Trump.

The Republican-controlled House of Representatives passed the tax package on Tuesday afternoon, sending the bill to the Senate, where a staff official ruled that three provisions of the House bill did not comply with the Senate's complex rules, said Sen. Bernie Sanders.

First the Senate voted in favour of deletingthe three offending provisions andthen voted to passthe bill. The billwill be sent back to the House for another vote on Wednesday.

The provisions in question deal with using educational savings accounts for home schooling and with private university endowments. The Senate parliamentarian's ruling against the provisions threw a wrench into what would have been a day of celebration for Republicans.

The bill passed the House earlier on Tuesday by a vote of 227-203, overcoming united opposition from Democrats and 12 Republicans who voted against it.

Vice-President Mike Pence took the precaution ofrescheduling a trip to Egypt and Israel for January so he would be on hand this week in case his tie-breaking voting power isneeded to ensure Senate passage of the bill.

Republicans, who control the 100-seat Senate by only a 52-48margin, can afford to lose support from no more than two partylawmakers. Republican Sen. Jeff Flake was still uncommittedlate on Monday. Sen. JohnMcCain, who has brain cancer, wasspending time with family in Arizona.

The biggest overhaul of the U.S. tax system in more than 30 yearsincludes steep tax cuts for corporations and wealthy taxpayers, as well as temporary tax cuts for some individuals and families. Itallows oil drilling in Alaska's Arctic National Wildlife Refuge andrepeals a federal fine imposed onAmericans under Obamacare for not obtaining health insurancecoverage, a change that could undermine the 2010 health-care lawformally known as the Affordable Care Act.

Middle-income households would see an average tax cut of $900 next year, while the wealthiest one per cent of Americans would see an average cut of $51,000, according to the nonpartisan Tax Policy Centre, a think-tank in Washington.

Republicans insist the package will boost the economy and job growth. They also see the measure as key to retaining their majorities in the House and Senate in elections next November.

Democrats say the bill will deepen the income gap between rich and poor Americans, while adding $1.5 trillion over the next 10 years to the mounting $20 trillion U.S. national debt.

"There are so many rip-offs in this bill that people are going to say this is some kind of new Gilded Age," said Sen. Ron Wyden, top Democrat on the Senate tax committee.

Some 52 per cent of adults oppose the tax plan, while 27 per cent support it, according to Reuters/Ipsos polling.