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UPDATE 3-Tax-cut debate in U.S. Congress swings to Senate bill

(Recasts with comments from Cornyn, Hatch, Hellwig, Perdue, Collins)

WASHINGTON, Nov 8 (Reuters) - A Senate tax-cut bill, differing from one in the House of Representatives, was expected to be unveiled on Thursday, complicating a Republican push to overhaul the federal tax code.

As the House tax committee moved ahead on its bill, senators were weighing new approaches to corporate taxes, deductions for state and local taxes, and the estate tax on inherited assets, senators said, providing few details.

John Cornyn, the No. 2 Senate Republican, told reporters that senators would be briefed on the bill on Thursday and it would be released afterward. He said it would not be delayed by potential changes in the House's bill.

"It doesn't make any difference what they do," Cornyn said.

House and Senate Republicans are working on separate plans for the biggest overhaul of the U.S. tax code since the 1980s. President Donald Trump and his House allies have proposed slashing the corporate tax rate to 20 percent from 35 percent.

The tax overhaul is a priority for Trump, who says it will boost economic growth and create jobs. Republicans have yet to score a major legislative win since he took office in January, even though they control Congress as well as the White House.

Democrats have blasted the proposals in the Republican tax legislation as giveaways to large corporations and the rich.

Senator Orrin Hatch, chairman of the tax-writing finance committee, told reporters he would prefer not to delay a corporate tax cut by a year, which some lawmakers said was a possibility. "Id prefer to get it done," he said.

Financial markets have rallied since Trump's stunning election victory in November 2016, driven partly by expectations that he and Congress would slash taxes on businesses.

Stock markets closed little changed on Wednesday, with investors focused on chances for a tax bill becoming law.

"I do think there's disappointment with Republicans kicking the tax bill around. ... Some of the things leaking out are not encouraging," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

WARNING TO REPUBLICANS

The latest version of the House would add $1.7 trillion to the federal deficit over 10 years, more than the $1.5 trillion initially projected, the nonpartisan Congressional Budget Office, which tallies the costs of legislation, said on Wednesday.

The House bill, unveiled last week, would repeal a tax deduction Americans can now take for state and local income and sales taxes, but preserve it for business owners. It would cap the deduction for state and local property tax paid at $10,000.

Republican Senator David Perdue told reporters the Senate bill would possibly repeal the entire state and local tax (SALT) deduction, an item important to people in heavily Democratic high-tax states such as California, New York and New Jersey.

Senate Democratic leader Chuck Schumer of New York said victories for Democrats in state elections on Tuesday should be a warning to Republicans. New Jersey voters elected a Democratic governor on Tuesday. Virginia chose a Democrat to succeed its outgoing Democratic governor.

"The Republicans should look at the elections last night, and it should be a giant stop sign for their tax bill. Where did they get clobbered? In the suburbs," Schumer said.

There are enough Republicans from high-tax states in the House to torpedo the tax bill, given that Democrats are likely to be united in their opposition to it. Republicans, who have a slim 52-48 majority in the Senate, also may need support from Democrats to pass their version of the bill.

Republican Senator Susan Collins of Maine, whose vote is crucial to approving a tax bill, declined to say if the Senate bill would duplicate the House's proposed estate tax repeal, but she told reporters: "Its certainly true that I expressed reservations about having complete repeal of the estate tax."

Like Collins, several Republican senators have questioned the need to repeal the estate tax, but Republicans have long complained that it is a burden on family businesses and farms.

(Additional reporting by Doina Chiacu, Katanga Johnson and Susan Heavey; Writing by Alistair Bell; Editing by Kevin Drawbaugh and Peter Cooney)