LIVE COVERAGE: The GOP Tax Cut Plan Is Out and Here’s What’s In It

TOPSHOT - The Capitol Christmas tree is lit during a ceremony on the West Front of the US Capitol in Washington, DC on December 6, 2017. The Engelmann Spruce from the Kootenai National Forest in Montana will be lit from nightfall to 11 p.m. through January 1, 2018. / AFP …
AFP PHOTO / MANDEL NGAN

The Republicans came together Friday to craft a tax cut bill that appears to have the backing of all 52 GOP Senators and nearly all GOP House members, virtually guaranteeing the measure will pass when put to a vote early next week.

Tennessee Republican Bob Corker, who voted against the original Senate bill, said Friday afternoon that he would vote for the bill. Senator Marco Rubio of Florida, who had been urging Republicans to strengthen a family-friendly child tax credit, also signaled he would vote for the bill after a larger portion of the credit was made refundable.

Every vote is crucial for Republicans, particularly in the Senate where they have a razor-thin majority. Health troubles of Senators John McCain and Thad Cochran have raised concerns that they may be unavailable to cast their votes for the bill. That would give Republicans just 50 votes, compared with the 48 votes from Democrats and left-wing allies likely to vote against the bill. In the case of a tie, Vice President Mike Pence can be called upon to cast the tie-breaker vote.

The Republican legislation is expected to be released at 5:30 P.M. on Friday.

Here’s what we think we know about the bill so far. We’ll update this as more information and the bill itself becomes available.

Update: 7:05 P.M.

One of the big goals of tax reform was simplification. Taxpayers were going to be able to file on a postcard and the number of brackets would fall to just four.

While the doubling of the standard deduction will make filing simpler for many Americans, the preservation of some of the more popular deductions and keeping the seven brackets in place will keep tax filing complicated for many. Even the dreaded “second tax system” of the individual alternative minimum tax has survived, albeit with a higher threshold.

Update: 6:52 P.M.

More from the tax bill.

  • SALT LIVES. The bill continues to allow people to write off the cost of state and local taxes with a cap of $10,000. Sales, income and property taxes can be deducted up to the cap.
  • Mortgage Interest Deduction Lives–Even for a second home. All current mortgages are grandfathered in. Interest deductible for new mortgages up to $750,000, below the current $1 million cap but above the $500,000 cap considered in earlier bills. Surprisingly, the mortgage interest deduction survives even for second homes.
  • Expanded Medical Expense Deduction. Republicans originally set out to eliminate the deduction for very high medical expenses.  They wound up expanding it. The bill provides for a deduction for medical expenses in 2018 and 2019 s exceeding 7.5 percent of adjusted gross income, rising to 10 percent beginning in 2020.
  • 529s for Younger Students. Allows families to use 529 accounts to save for elementary, secondary and higher education.
  • Grad Students Can Breathe Easy. Graduate students get to keep exempting the value of reduced or waived tuition from taxes.

Update: 6:46 P.M.

Fox New’s Chad Pergram reports on Ryan’s conference call with House members.

 

Update 6:38 P.M.

Here’s the basics of what’s in the tax plan.

  • Individual tax brackets of 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent, and 37 percent.
  • The standard deduction is roughly doubled from $6,350 and $12,700 under current law to $12,000 and $24,000 for individuals and married couples, respectively.
  • Twenty percent deduction for pass-through businesses
  • Corporate tax rate of 20 percent.
  • Bill eliminates individual mandate–but not until 2019.
  • The corporate repatriation rate is set at 15.5 percent on cash and 8 percent on illiquid assets, significantly higher than earlier reports indicated.
  • Bill requires the opening of the Arctic Wildlife Refuse to oil drilling.
  • Child tax credit set at $2,000, refundable up to $1,400, phase out starts at $400,000 of income (lower than expected).

Update 5:45 P.M.

Here is the explanatory summary of the tax bill. And, for the very ambitious, here’s a link to the full bill itself.

Update 5:14 P.M.

While we are stretched on tenter-hooks awaiting the release of the tax bill, here are a few updates.

    • Sarah Huckabee Sanders issued a statement praising Senator Corker, who has had quite a combative relationship with the President for several months. ““He sees a great entrepreneurial spirit being released in our country and he is a part of that spirit. When these massive tax cuts and incentives kick in, jobs and growth will follow at a very high level,” Sanders said in the statement.
    • Here’s Corker’s statement explaining why he is now voting for the tax bill.
    •  Marco Rubio has also taken to twitter to talk about his vote.

 

Original Points:

  • Republicans agreed to increase the refundable portion of the child tax credit, which makes it more valuable to lower-income taxpayers. As under the earlier Senate bill, the credit will be set at $2000. But the refundable portion, which is the amount of money taxpayers can get back as a refund even if they owe no income tax, was raised from $1,100 to $1,400. That change was made as a concession to Senator Marco Rubio, who had said he would vote against the bill if the child tax credit were not strengthened.
  • The controversial cuts to the deduction for state and local taxes have been pared back. Under the GOP proposal, taxpayers would be able to deduct up to $10,000 of state property taxes, income taxes, or sales taxes. The earlier House and Senate bill only allowed it to be used for property taxes.
  • The attempt to give churches a wider lattitude when it comes to political speech without jeopardizing their tax exempt status was killed after Democrats convinced the Senate parliamentarian that the Senate’s rules require a 60 vote super-majority to pass the measure.
  • The corporate tax rate will be set at 21 percent, up from the 20 percent in the earlier bills. The tax cut will not be delayed by a year, something lawmakers were considering as a way of reducing the budgetary cost of the bill. Under current law, the corporate tax rate is 35 percent.
  • The deduction for pass-through business income will be set at 20 percent. That is lower than the 23 percent under the Senate bill, which translates into a higher tax rate for owners of these businesses.
  • The estate tax will not be repealed. Instead, the threshold for it to apply will be doubled to $11 million.
  • In a big reversal, medical expense deductions have become easier to take. Under current law, taxpayers can deduct medial expenses that go above 10 percent of their income. The House version called for repealing the deduction all together. The bill now keeps the deduction and lowers the threshold to 7.5 percent. That’s a big tax cut for the sick.
  • The repeal of the individual mandate has survived and will be included in the bill.
  • The top marginal tax rate for individuals will fall to 37 percent, lower than the Senate bill’s 38 percent. The current top rate is 39.6 percent.
  • Student loan interest deductions and deductions for waived tuitions for graduate students will also survive, according to several reports. Those provisons had been meeting fierce resistance from higher education lobbyists and student activists.

 

 

.