House Republicans on Thursday released their long-awaited legislation to overhaul the nation’s tax code, proposing major cuts to corporate and individual tax rates.
The 429-page “Tax Cuts and Jobs Act,” is just the beginning of the GOP’s goal of overhauling the nation’s tax code for the first time in more than 30-years.
The bill is very similar to the parameters that GOP leaders and the White House outlined in September. It would reduce the number of individual tax brackets, cut rates for businesses, and eliminate several tax breaks.
To help pay for the legislation, Republicans plan to suggest proposals that are sure to be controversial.
The bill would keep the mortgage-interest deduction, but only for the first $500,000 of a newly purchased home. Currently, that deduction is capped at $1 million. But houses purchased in the past could keep the deduction regardless of price.
In somewhat of a victory for blue-state Republicans, the bill allows taxpayers to deduct their state and local property taxes, but only up to $10,000. It would not allow people to deduct their state and local income or sales taxes.
Leading up to the unveiling of the bill, blue-state Republicans fought to keep that deduction. So far it is not know how they will react to the compromise.
Some proposals that were not included are the repeal of the Obamacare individual mandate or the limits on pre-tax contributions to 401(k) plans.
The legislation would consolidate the current seven tax brackets into four, with the top tax rate staying at 39.6%. The other tax rates in the bill are 35%, 25%, and 12%.
The corporate tax rate would be cut from 35% to 20% and for noncorporate “pass through” businesses the rate would be lowered from 39.6% to 25%.
The standard deduction would be nearly doubled, while the child tax credit would be increased from $1,000 to $1,600. It also creates a $300 credit for expenses related to the care of parents and non-child dependents, and keeps the child and dependent care credit and earned income tax credit.
In a statement, President Trump announced his support for the bill calling it a step toward “massive tax relief for the American people.”:
“The special interests will distort the facts, the lobbyists will try to save their special deals, and some in the media will unfairly report on our efforts. But my Administration will work tirelessly to make good on our promise to the working people who built our Nation and deliver historic tax cuts — the rocket fuel our economy needs to soar higher than ever before.”
House GOP leaders say they want to pass the bill by Thanksgiving.