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Thursday, 10 May, 2001, 16:59 GMT 17:59 UK
Senate clears US tax cut plans
President George W Bush
President George W Bush is pushing through massive tax cuts
The US Senate on Thursday voted in favour of a $1.35bn, 11-year, tax cut plan that was cleared by the Republicans in the US House of Representatives on Wednesday.

The Senate voted 53 to 47 for a $1.97 trillion fiscal 2002 budget plan that includes the biggest tax cuts seen in the US in 20 years.

Final approval from the two houses of Congress had been widely expected after the package was given a preliminary go-ahead last week.

That clearance followed talks between Republicans and moderate Democrats representing both the Senate and the House of Representatives.

Less than initially sought

The decision on spending removes a major hurdle to completing a compromise budget for 2002 that largely reflects President George W Bush's fiscal priorities.

President Bush is now expected to be given the powers he needs to reduce taxes by the agreed amount.

However, the agreed budget is not binding: new tax-cutting legislation must still be created, then passed by the Senate.

But following Thursday's clearance, it will only need a simple majority rather than a majority of 60 to get through the Senate.

A greater concern for President Bush; the cut is less than both he and Republican party leaders had been hoping for.

President Bush had called for a 10 year, $1.6bn tax reduction in his campaign for the Republican presidential nomination in 1999, making it the pillar of his economic plan.

Only last week did he concede he would have to compromise.

Compromise

Under the deal, the Senate and the House agreed to tax cuts over ten years of $1.25bn, plus an additional emergency tax cut of $100m this year to stimulate the economy.

If that was distributed equally among all taxpayers, it would amount to around $500 per person.

However, the tax compromise means that some parts of President's plans will have to be dropped.

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See also:

02 May 01 | Business
$1,350bn US tax cut deal
06 Apr 01 | Business
Bush pushes budget as tax cut wavers
06 Apr 01 | Business
Recession fears hit Wall Street
06 Apr 01 | Business
Shock fall in US jobs
27 Mar 01 | Business
Bush calls for lasting tax cuts
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