Republicans unveil $1.5 trillion tax-cut package

Congressional Republicans late Friday officially unveiled their final $1.4 trillion-plus tax-cut plan that slashes corporate and individual rates, winds down certain credits and exemptions, and imposes new international tax rules.

The conference report that House and Senate lawmakers agreed on caps months of work and negotiations among Republicans, who are hoping for quick passage of the top legislative priority next week.

“This April 15th, when you file your taxes, that is the last time you will file under this monstrous, broken tax code,” said House Ways and Means Committee Chairman Kevin Brady, Congress’s top tax-writer.

Republican leaders in the House and Senate said they plan to hold votes next week in order to get the measure to President Trump’s desk before Christmas.

The plan lowers the corporate tax rate from 35 percent to 21 percent effective Jan. 1 — a change Republicans are billing as the biggest corporate tax rate reduction in U.S. history.

It preserves the existing number of individual tax rates at seven, not counting the zero rate, and lowers the top rate from 39.6 percent to 37 percent.

The new top rate applies to individuals making more than $500,000 and couples making more than $600,000. Under current law, the top rate of 39.6 percent applies to individuals making more than $418,400 and couples making more than $470,700.

The new individual rates would be effective for 2018, but are set to expire after 2025 — a gimmick Republicans used to keep the plan’s overall price tag within the $1.5 trillion limit set by fast-track budget rules.

GOP leaders have said they anticipate future lawmakers will simply extend the cuts down the road.

The bill also roughly doubles the standard deduction to $12,000 for individuals and $24,000 for families, which increases the number of “zero filers” who face no federal income tax liability and the amount of income not subject to taxation for those who opt to take the standard deduction.

It preserves the current mortgage interest deduction for existing mortgages, but imposes a $750,000 cap for future mortgages. It also preserves the existing deduction for charitable contributions.

It repeals Obamacare’s individual mandate starting in 2019 — an item that was added during the negotiating process as lawmakers hunted for revenue sources they could use to pay for other rate cuts.

It also doubles the current exemption for the estate tax on inheritances from $5 million to $10 million, so fewer people will be affected.

For small businesses, there is a new 20 percent deduction that applies to the first $315,000 of joint income for so-called “pass-through” companies that file their taxes as individuals.

For income above that level, there’s a deduction for up to 20 percent on profits, a move tax-writers estimate would reduce marginal tax rates to a maximum of 29.6 percent.

Businesses will also be able to immediately write off capital expenses for new equipment, rather than the current system that has them do it over a number of years.

The bill repeals the corporate alternative minimum tax, which is intended to make sure all companies pay at least some tax, and raises the income thresholds for the individual alternative minimum tax.

The state and local tax deduction, which had been on the chopping block at the start of the process, was preserved in part.

People can now take a deduction of up to a total of $10,000 for sales, income, and property taxes paid.

The plan also doubles the child tax credit from $1,000 to $2,000, and makes $1,400 of it refundable against payroll taxes.

That was a change sought by Sens. Marco Rubio and Mike Lee, among others, in order to reach more families that may not make enough to pay federal income taxes.

On the international side, the bill imposes a 15.5 percent “repatriation” tax for cash holdings that companies have parked overseas, and an 8 percent tax for non-cash holdings.

While Republicans are looking for swift passage next week, Democrats said the package is tilted toward corporations and the wealthy and doesn’t do enough for the middle class.

“This tax bill is a moral and economic obscenity,” said Sen. Bernard Sanders, Vermont Independent. “It is a gift to wealthy Republican campaign contributors and an insult to the working families of our country.”