Congressional Republicans unveiled the most sweeping overhaul of the nation’s tax code Friday evening with an eye toward final passage next week after two key GOP senators endorsed the legislation.
The final version of the so-called Tax Cuts and Jobs Act keeps seven tax brackets, but reduces rates for five of them. The new rates start at 10 percent and rise to 12, 22, 24, 32, 35 and 37 percent. The corporate tax rate is reduced from 35 percent to 21 percent and the bill provides sweeping tax deductions to other businesses, lowering their top effective tax rate to about 30 percent instead of 39.6 percent
The final package would double the basic per-child tax credit for families making up to $400,000 a year from $1,000 to $2,000. Sen. Marco Rubio, R-Fla., was expected to vote for the bill after winning a late concession that would make up to $1,400 of the credit available as a tax refund to lower- and middle-income families with relatively small tax bills.
Another GOP holdout, Bob Corker of Tennessee, said Friday that he would endorse the bill, describing it as an opportunity “to make U.S. businesses domestically more productive and internationally more competitive [and] one we should not miss.”
“I realize this is a bet on our country’s enterprising spirit,” Corker added, “and that is a bet I am willing to make.”
Senate Republicans passed their original tax bill by a vote of 51-49 — with Rubio’s support. Corker was the only Republican to vote against the original bill out of concerns about its effect on the federal deficit.
Republicans, who hold a 52-48 majority in the Senate, can only afford to lose two votes in the Senate. Vice President Mike Pence would have to break a tie if required.
Republicans have promised the bill would provide needed tax relief to Americans at all income levels. Democrats disagree, arguing that the legislation would help wealthy Americans and big business at the expense of the poor and middle class.
The package would nearly double the standard deduction, to $24,000 for married couples. But it 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 such as 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 agreement also calls for repealing ObamaCare’s individual mandate, a major step toward the ultimate GOP goal of unraveling the law. It retains a deduction for medical expenses and an exemption for graduate school tuition waivers.
The business tax cuts would be permanent, but reductions for individuals would expire in 2026 — 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 Associated Press contributed to this report.