- Critics say the bill eases taxes more of businesses rather than the middle class
- Politics-wise, Republican leaders have won over two key GOP holdouts Friday
begin quote from:
Final tax reform bill released
Cuomo, GOP lawmaker clash: Stick to the facts
Republicans release their final tax bill ahead of key vote next week
Story highlights
(CNN)Republicans
unveiled their final tax bill Friday evening, a step that will place
them on track to vote on their plan next week and potentially have
President Donald Trump sign it into law by the end of the year.
It's
a campaign promise that Republicans are optimistic they'll finally be
able to deliver on, bolstered in part by several key senators saying
they'll back the bill Friday before the bill's public release.
"I'm confident we'll have the votes," said Sen. Rob Portman, a Republican from Ohio and a member of the tax conference.
What's in the bill
The
bill -- which critics say is heavily weighted to ease the tax burden of
businesses rather than the middle class -- drops the corporate tax
rate down from 35% to 21%, repeals the corporate alternative minimum
tax, nearly doubles the standard deduction for individuals and
restructures the way pass-through businesses are taxed.
The
bill keeps seven personal income tax brackets, and lowers that tax
rates for most brackets, including dropping the top rate to 37% from
39.6%.
The child tax credit under
the bill will be $2,000 and the credit is refundable up to $1,400. After
months of negotiations in both chambers, a narrow vote in the US Senate
and this last-minute tweak to the child tax credit aimed to win back
the support of Florida Sen. Marco Rubio, Republicans were upbeat Friday
afternoon as they briefed reporters on where the bill stood.
While
Republican leaders released a two-page summary of the bill's contents,
the summary did not include specific details on how the plan is funded.
The
conference report will also allow individuals to deduct up to $10,000
in state and local taxes. Individuals can either elect to deduct up to
$10,000 in state and local income and property taxes or state and local
property and sales taxes. Originally, Republicans had tried to repeal
the state and local deductions altogether, but pushback in the House and
Senate forced leaders to retain the property tax deduction. Then, the
conference report went even further and made concessions in order to win
over Republicans in the House from high-tax states like New Jersey, New
York and California.
Unlike previous versions of the bill, the conference committee version leaves the student loan interest deduction untouched.
The
bill lowers the mortgage interest deduction cap. For those who take out
a new mortgage on a first or second home, they will only be allowed to
deduct the interest on debt up to $750,000 for a primary residence, down
from $1 million currently. Homeowners who already have a mortgage would
be unaffected by the change.
Rather
than repealing the estate tax, which the House bill originally had
done, the latest version of the bill follows the Senate model and
doubles the estate tax exemption meaning that fewer Americans will have
to pay it.
The bill also repeals
the corporate alternative minimum tax, which had been left in the Senate
bill, but had led to outcry from business groups.
On
the individual alternative minimum tax, the final bill doubles the
exemption for individuals who make up to $500,000 and married couples
who make up to $1 million.
Key Republican votes line up behind the plan
Republican leaders repeatedly said Friday that they were convinced they had enough support to pass their legislation next week.
"I'm
confident at the end of the day, the Senate will approve this
conference committee report," House Ways and Means Chairman Rep. Kevin
Brady said.
The bill appeared to be
gathering momentum Friday, as key holdouts in the Senate -- where
Republicans have a slim two-vote majority -- signaled their support for
the bill, some more directly than others.
After
the plan's release, Sen. Susan Collins of Maine, who has thus far been
undecided, released a positive statement that held back from explicitly
saying she'd vote for the bill.
"Americans
deserve a tax system that is fair, simple, and promotes economic
growth," Collins said. "I am pleased that the final tax reform bill
includes all three of the amendments I authored, along with a number of
provisions for which I strongly advocated, that will benefit lower- and
middle-income families."
In addition, Sen. Bob Corker, who initially voted against the GOP tax plan when it first past the Senate, said Friday afternoon he would support the plan.
Just
hours before the bill was released, Rubio tweeted that he was happy
with the direction the bill settled in, and a source close to Rubio told
CNN that the eleventh-hour high-wire act had worked and Rubio was
planning to support the bill.
"For
far too long, Washington has ignored and left behind the American
working class. Increasing the refundability of the Child Tax Credit from
55% to 70% is a solid step toward broader reforms which are both
Pro-Growth and Pro-Worker," Rubio tweeted.
What does the bill cost?
One
of the key items Republicans have had to keep a close eye on is how
much their bill costs. Under the Senate rules, the bill cannot cost more
than $1.5 trillion over 10 years and it cannot add to the deficit after
that.
But, many of the newest provisions in the tax bill are expensive. Expanding the child tax credit, for example, wasn't cheap.
So
how does the new bill pay for things like the child tax credit or
lowering the top rate? One of the ways was the bill lowered how much
pass-through businesses could deduct from their taxable income. It was
23% in the Senate bill, but now it's 20%. The bill increased the tax
rate for businesses that want to bring back money from overseas to 8
percent for illiquid assets and 15.5% liquid assets. The final agreement
also raises approximately $100 billion through increasing the corporate
tax rate from 20% to 21%.
The bill
sunsets the individual tax breaks at the end of 2025 and Republicans
also repealed the individual mandate -- a key part of the Affordable
Care Act -- to help finance the bill.
This story has updated and will continue to update with additional developments.
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