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| House Republicans unveil tax plan to benefit corporations and the wealthy | |
| (about 1 hour later) | |
| Donald Trump’s push for deep tax cuts reached a milestone on Thursday as his fellow Republicans in the House of Representatives unveiled a long-awaited plan which would benefit corporations and the wealthy but is less generous to the middle class. | Donald Trump’s push for deep tax cuts reached a milestone on Thursday as his fellow Republicans in the House of Representatives unveiled a long-awaited plan which would benefit corporations and the wealthy but is less generous to the middle class. |
| The legislation would permanently lower the corporate tax rate to 20% from 35% and repeals the inheritance tax on multimillion-dollar estates in what would be the most sweeping change to the United States tax code in three decades. | The legislation would permanently lower the corporate tax rate to 20% from 35% and repeals the inheritance tax on multimillion-dollar estates in what would be the most sweeping change to the United States tax code in three decades. |
| It also would reduce the number of tax brackets from seven to four and nearly double the standard deduction that most Americans take on their tax returns to $12,000 for individuals and $24,000 for couples. | It also would reduce the number of tax brackets from seven to four and nearly double the standard deduction that most Americans take on their tax returns to $12,000 for individuals and $24,000 for couples. |
| Although the Republicans had long described their effort as a push for “tax reform”, the bill entitled “the Tax Cuts and Jobs Act,” was presented explicitly as a tax cut on Thursday. | |
| GOP Speaker Paul Ryan hailed the plan as a “very important and special moment” for the country and claimed that it would reduce taxes for a family of four that makes $59,000 a year by $1,182, while fellow Republicans such as majority whip Steve Scalise boasted that it would allow Americans to fill out their taxes on a postcard. | |
| In an interview afterwards, Ryan claimed of the bill, long hailed as a way to cut corporate taxes and make American businesses more competitive abroad, “it’s very clear and obvious that the purpose of this is a middle-class tax cut”. | |
| The White House put out a statement praising the legislation as providing “the rocket fuel our economy needs to soar higher than ever before”. | |
| The sweeping tax cuts, long a priority of the Trump administration and congressional Republicans, faces major obstacles to passage as Democrats are almost uniformly skeptical of the plan and a number of Republicans have concerns. | The sweeping tax cuts, long a priority of the Trump administration and congressional Republicans, faces major obstacles to passage as Democrats are almost uniformly skeptical of the plan and a number of Republicans have concerns. |
| Among the biggest red flags within the GOP are a provision to cap the deduction for state and local income taxes, which has faced skepticism from Republicans who represent high-tax states such as New York and New Jersey and the plan’s addition of $1.5tn to the national debt, which may raise the ire of deficit hawks. The bill would eliminate the tax deduction for state taxes and leave only a limited deduction for up to $10,000 in local property taxes. | |
| The legislation is expected to face fierce opposition from realtors and the homebuilding industry as well over a provision to cap the deduction for mortgage interest on newly purchased homes at $500,000. | The legislation is expected to face fierce opposition from realtors and the homebuilding industry as well over a provision to cap the deduction for mortgage interest on newly purchased homes at $500,000. |
| It also has already sparked opposition from the National Federation for Independent Business, a small business lobby. The group expressed concern that the corporate tax cuts on small businesses that pay taxes on pass throughs via their owner’s individual tax returns were insufficient. | |
| According to a summary obtained by news organizations, the long-awaited tax plan would: | According to a summary obtained by news organizations, the long-awaited tax plan would: |
| Limit the widely used deduction for mortgage interest for newly purchased homes at up to $500,000, a sharp reduction from the current $1m cap. | Limit the widely used deduction for mortgage interest for newly purchased homes at up to $500,000, a sharp reduction from the current $1m cap. |
| Limit the deductibility of local property taxes to $10,000. | Limit the deductibility of local property taxes to $10,000. |
| Eliminate the deduction for state income taxes. | Eliminate the deduction for state income taxes. |
| Nearly double the standard deduction used by most average Americans to $12,000 for individuals and $24,000 for families. | Nearly double the standard deduction used by most average Americans to $12,000 for individuals and $24,000 for families. |
| Slash the corporate tax rate from 35% to 20%. | Slash the corporate tax rate from 35% to 20%. |
| Repeal the inheritance taxes on multimillion-dollar estates. | Repeal the inheritance taxes on multimillion-dollar estates. |
| Increase the child tax credit from $1,000 to $1,600, though the $4,050 per child exemption would be repealed. | Increase the child tax credit from $1,000 to $1,600, though the $4,050 per child exemption would be repealed. |
| Shrink the number of tax brackets from seven to four, with respective tax rates of 12%, 25%, 35% and 39.6%. | Shrink the number of tax brackets from seven to four, with respective tax rates of 12%, 25%, 35% and 39.6%. |
| Preserve a popular retirement account for middle-class Americans by leaving intact existing rules on 401(k) retirement accounts and the ability of Americans to contribute up to $18,000 into the accounts tax-free. | Preserve a popular retirement account for middle-class Americans by leaving intact existing rules on 401(k) retirement accounts and the ability of Americans to contribute up to $18,000 into the accounts tax-free. |
| GOP leaders briefed rank-and-file lawmakers on the proposal Thursday morning ahead of a formal rollout and a show of unity event at the White House with Donald Trump. | GOP leaders briefed rank-and-file lawmakers on the proposal Thursday morning ahead of a formal rollout and a show of unity event at the White House with Donald Trump. |
| A major revamp of the tax code, the first in three decades, is a top legislative and political priority of Republicans. | A major revamp of the tax code, the first in three decades, is a top legislative and political priority of Republicans. |
| But curtailing the state and local income tax deduction is sure to face opposition from Republicans in high-tax states. | But curtailing the state and local income tax deduction is sure to face opposition from Republicans in high-tax states. |
| “I view the elimination of the deduction as a geographic redistribution of wealth, picking winners and losers,” said Representative Lee Zeldin of New York. “I don’t want my home state to be a loser, and that really shouldn’t come as any surprise.” | “I view the elimination of the deduction as a geographic redistribution of wealth, picking winners and losers,” said Representative Lee Zeldin of New York. “I don’t want my home state to be a loser, and that really shouldn’t come as any surprise.” |
| The legislation is a longstanding goal for Capitol Hill Republicans who see a once-in-a-generation opportunity to clean up an inefficient, loophole-cluttered tax code. | |
| Influential conservative Representative Mark Meadows dismissed proposed retirement changes as a “non-starter”, adding “that’s what most of middle-income America uses as their nest egg”. | Influential conservative Representative Mark Meadows dismissed proposed retirement changes as a “non-starter”, adding “that’s what most of middle-income America uses as their nest egg”. |
| The plan calls for nearly doubling the standard deduction used by most average Americans to $12,000 for individuals and $24,000 for families, and increasing the per-child tax credit. On net, it could mean tax increases for many upper middle-income families. | The plan calls for nearly doubling the standard deduction used by most average Americans to $12,000 for individuals and $24,000 for families, and increasing the per-child tax credit. On net, it could mean tax increases for many upper middle-income families. |
| Slashing the corporate tax rate from 35% to 20% was a key demand of Trump’s. Repealing the inheritance taxes on multimillion-dollar estates would also represent a big break for the wealthy. | Slashing the corporate tax rate from 35% to 20% was a key demand of Trump’s. Repealing the inheritance taxes on multimillion-dollar estates would also represent a big break for the wealthy. |
| Republicans and Trump argue that sharply cutting tax rates for businesses improves US economic competitiveness, but the possibility of letting the lower corporate rates expire is rankling some longtime advocates who say the uncertainty could limit its boost to the economy. | Republicans and Trump argue that sharply cutting tax rates for businesses improves US economic competitiveness, but the possibility of letting the lower corporate rates expire is rankling some longtime advocates who say the uncertainty could limit its boost to the economy. |
| The ambitious timetable calls for passing the complex measure in the House by Thanksgiving. | The ambitious timetable calls for passing the complex measure in the House by Thanksgiving. |
| “Failure is not an option,” said Representative Chris Collins, a Republican from New York. | “Failure is not an option,” said Representative Chris Collins, a Republican from New York. |
| Reuters and the Associated Press contributed to this report | Reuters and the Associated Press contributed to this report |