WASHINGTON – The Senate has devised a tax plan that would cut the corporate-tax rate to 20% starting in 2019, according to two Senate Republican aides and multiple GOP senators, one year later than proposed by the House and later than the Trump administration had hoped.
Continue Reading Below
The plan also includes a full repeal of deductions for state and local taxes and sticks with seven tax brackets -- compared with the four brackets proposed by the House -- according to Republican senators leaving a closed-door briefing. The top tax rate would be 38.5% and would apply to individuals making $500,000 a year or households making $1 million, according to Sen. John Hoeven (R., N.D.)
The mortgage-interest deduction would be preserved for home loans of up to $1 million, the same as under current law and a departure from a House plan that had lowered that amount to $500,000.
Senate Republicans also declined to repeal the mandate that individuals buy health insurance or pay a penalty, under the Affordable Care Act, a step that would have raised hundreds of millions of dollars for tax cuts but that would generate controversy.
The details are starting to trickle out as the Republican effort to pass a $1.5 trillion tax cut and deliver President Donald Trump his first major legislative win entered a critical period. The House and the Senate are operating on parallel tracks to clear legislation over a series of hurdles.
GOP senators said Thursday that they expected the corporate tax rate cut to be delayed by one year, but that could change depending on how the official estimates of the bill's cost come in.
Continue Reading Below
"It may be delayed one year, but immediate expensing is included up front, which is a huge deal," Sen. Mike Rounds (R., S.D.) told reporters of the corporate tax rate cut.
Passage of legislation through the House Ways and Means Committee, followed by the unveiling of a Senate alternative, will move the debate beyond fights between the GOP and Democrats and into an arena marked by differences between Republicans in each chamber.
Senate Republicans were set to release a plan that diverges from the House version, which cuts individual- and corporate-tax rates and repeals the estate tax.
High-income households would get the biggest boost under the House plan, with the top 1% garnering 20.6% of the cut next year and almost half in 2027, according to the Tax Policy Center.
The cuts would be paid for in part by the elimination of various household deductions.
But Senate Republicans preserved the medical-expense deduction, which the House plan eliminates, and an adoption-tax credit that the House plan had originally eliminated.
The House picked up where it left off Wednesday, facing the problem of how to fill a $74 billion hole in the budget -- and beyond that, the emerging hesitation of more Republicans.
The House panel was preparing to vote on that measure and on its tax package later Thursday.
A Wall Street Journal tally has identified at least nine House Republicans who are either against the House GOP plan or undecided. House Republicans can lose only 22 GOP votes during a floor vote planned for next week if they are to pass the legislation given that no Democrats are expected to support it.
Senate Majority Whip John Cornyn (R., Texas) told reporters the Senate tax bill would likely come up for a floor vote the week after Thanksgiving.
Write to Siobhan Hughes at firstname.lastname@example.org, Richard Rubin at email@example.com and Kristina Peterson at firstname.lastname@example.org
(END) Dow Jones Newswires
November 09, 2017 18:01 ET (23:01 GMT)