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

Republicans in the U.S. Congress overcame a last-minute snag on Tuesday in their drive to approve the biggest tax code rewrite in 30 years, requiring another vote on Wednesday.

3 provisions of bill did not comply with Senate rules, requires another vote in House Wednesday

Sen. Bernie Sanders speaks to the press on Tuesday in Washington. Sanders, an independent on the Senate budget committee, says the U.S. Senate parliamentarian has ruled against three provisions of the Republican tax bill. (Tasos Katopodis/Getty Images)

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

The drive by the Republicans to approve the biggest tax code rewrite in 30 years hit a snag earlier in the day, requiring another vote in 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 deleting the three offending provisions and then voted to pass the bill. The bill will 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.

House Speaker Paul Ryan leaves the House Chamber after voting on the Republican tax bill on Tuesday. (Jacquelyn Martin/Associated Press)

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 of rescheduling a trip to Egypt and Israel for January so he would be on hand this week in case his tie-breaking voting power is needed to ensure Senate passage of the bill.

Republicans, who control the 100-seat Senate by only a 52-48 margin, can afford to lose support from no more than two party lawmakers. Republican Sen. Jeff Flake was still uncommitted late on Monday. Sen. John McCain, who has brain cancer, was spending time with family in Arizona.

U.S. Vice-President Mike Pence arrives for a Senate Republican policy luncheon Tuesday in Washington. Pence postponed his trip to Egypt and Israel until the middle of January due to the vote. (Alex Wong/Getty Images)

The biggest overhaul of the U.S. tax system in more than 30 years includes steep tax cuts for corporations and wealthy taxpayers, as well as temporary tax cuts for some individuals and families. It allows oil drilling in Alaska's Arctic National Wildlife Refuge and repeals a federal fine imposed on Americans under Obamacare for not obtaining health insurance coverage, a change that could undermine the 2010 health-care law formally 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.

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