Tax Cuts for Business, Wealthy in Plan 12/14 06:11
Generous tax cuts for corporations and the wealthiest Americans would be
delivered in a sweeping overhaul of the tax laws, under a new agreement crafted
by Republicans in Congress.
WASHINGTON (AP) -- Generous tax cuts for corporations and the wealthiest
Americans would be delivered in a sweeping overhaul of the tax laws, under a
new agreement crafted by Republicans in Congress.
Middle- and low-income families would receive smaller tax cuts, though
President Donald Trump and Republican leaders have billed the package as a huge
benefit for the middle class. The agreement reached Wednesday by House and
Senate GOP leaders also calls for scrapping a major tax requirement of the
"Obamacare" health law, a step toward the ultimate GOP goal of unraveling the
The agreement combines key elements of separate tax bills recently passed by
the House and Senate, striking compromises on some of them. The Republicans are
pushing to deliver final legislation to Trump before Christmas as the first
major legislative accomplishment of his presidency.
At the White House, Trump was eager to receive it. "The cynical voices that
opposed tax cuts grow smaller and weaker, and the American people grow
stronger, he said. "This is for people of middle income, this is for companies
that are going to create jobs. This is for very, very special people, the great
people of America."
The business tax cuts would be permanent, but reductions for individuals
would expire after a decade --- saving money to comply with Senate budget
rules. In all, the bill would cut taxes by about $1.5 trillion over the next 10
years, adding billions to the nation's mounting debt.
The legislation, still being finalized, would cut the top tax rate for the
wealthiest earners --- Trump among them --- from 39.6 percent to 37 percent,
slash the corporate income tax rate from 35 percent to 21 percent and allow
homeowners to deduct interest only on the first $750,000 of a new mortgage.
The top tax rate currently applies to income above $470,000 for married
couples, though lawmakers are reworking the tax brackets.
The standard deduction would be nearly doubled, to $24,000 for married
Details of the agreement were described by Republican senators and
congressional aides. They spoke on condition of anonymity because they weren't
authorized to publicly discuss private negotiations.
"It's not my vision of the perfect, but again, this is definitely going to
be a strong pro-growth tax package," said Sen. Ron Johnson, R-Wis.
Republicans view passage of the legislation as a political imperative,
proving to voters they can govern as the GOP fights to hold onto its majorities
in the House and Senate in next year's elections. Republicans say they expect
the package to increase economic growth, generating additional tax revenue and
lessening the hit to the $20 trillion budget deficit. Independent economists
aren't as optimistic.
Federal Reserve Chair Janet Yellen said Wednesday that she and her Fed
colleagues, who set interest rate policy, expect a "modest lift" to economic
growth from the tax package.
Negotiators have removed several controversial provisions from the tax bill,
including one that would have eliminated the deduction for interest on student
loans and another deduction for medical expenses, said two congressional aides.
Also, the bill would no longer start taxing graduate-school tuition waivers,
the aides said.
The tax bill would scale back the deduction for state and local taxes,
allowing families to deduct only up to a total of $10,000 in property and
income taxes. The deduction is especially important to residents of high-tax
states like New York, New Jersey and California.
Business owners who report business income on their personal tax returns
would be able to deduct 20 percent of that income.
The bill would repeal the mandate that most Americans get health insurance,
a provision of the 2010 health care law. Republicans suffered a humiliating
defeat this past summer when they were unable to dismantle the health care law
after seven years of promises. Scrapping the individual mandate would provide
them with more than $300 billion for deeper tax cuts while also undermining the
Senate leaders plan to vote on the package next Tuesday. If it passes, the
House would vote next.
"Let's not waver now --- let's not give in to the Washington status quo ---
not when tax reform is so close," Rep. Kevin Brady, R-Texas, chairman of the
tax-writing House Ways and Means Committee, said at the start of the joint
House-Senate conference committee's first public meeting. The committee is
charged with blending the tax bills passed by the House and Senate, though
Republicans have done all their negotiations behind closed doors.
Full details will be unveiled by the end of the week, Brady said.
Democrats, who haven't been included in any substantive talks on the bill,
have assailed it as unfairly tilted in favor of business and the wealthy.
"This is the ultimate betrayal of the middle class," Sen. Ron Wyden of
Oregon, one of the Democratic conferees, charged at the meeting.
Once the plan is signed into law, workers could start seeing changes in the
amount of taxes withheld from their paychecks early next year, lawmakers said
--- though taxpayers won't file their 2018 returns until the following year.
The IRS said in a statement Wednesday that taxpayers could begin seeing less
money withheld from their paychecks "as early as February." The agency said it
was taking initial steps to prepare withholding guidance for employers, which
it expects to issue in January.
Corporate tax cuts would take effect in January, allowing businesses to
immediately write off the full cost of capital investments.