US Republicans unveil tax cut bill

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US House of Representatives Republicans unveiled long-delayed legislation on Thursday to deliver deep tax cuts that President Donald Trump has promised, setting off a frantic race in Congress to give him his first major legislative victory.

The 429-page bill, representing what would be the largest overhaul of the US tax system since the 1980s, called for slashing the corporate tax rate to 20 percent from 35 percent, cutting tax rates on individuals and families and ending certain tax breaks for companies and individuals.

A number of provisions would hit taxpayers in Democratic-leaning states hardest, like rolling back deductions for state and local taxes and cutting in half the popular mortgage interest deduction.

It stirred anger at US universities, which said its proposals to tax endowments of private institutions and repeal a deduction for student-loan interest payments would hurt institutions and students.

The legislation, called the Tax Cuts and Jobs Act, produces new advantages for rich Americans through lowered corporate taxes, phasing out the estate tax and dumping the alternative minimum tax.

Overall, the plan would reduce federal revenues by roughly 1.5 trillion US dollars over 10 years.

The bill eliminates the most widely-used deduction – income tax – and caps property tax deductions, the second most-used, at 10,000 US dollars.

“This is a very important and special moment for our country, for all Americans. Are we going to let the defenders of the status quo win and see our country continue down this downward spiral?” Republican House Speaker Paul Ryan asked, despite data showing about eight straight years of economic growth.

Speaker Ryan and fellow Republicans discusses the GOP tax plan on Capitol Hill, September 27, 2017. /Reuters Photo.

Meeting with Ryan and other key House Republicans, Trump told the lawmakers he was counting on them to maintain the momentum for tax cuts, and repeated his request that Congress send him the legislation to sign into law by the US Thanksgiving holiday on Nov. 23.

Trump called the bill an “important step” toward tax relief for Americans, adding in a statement, “We are just getting started, and there is much work left to do.”

The National Association of Home Builders blasted the legislation, saying it would damage home prices and punish homeowners in urban areas.

“We’re concerned if enacted, this bill will throw us back into another housing recession,” Jerry Howard, the group’s president, said in an interview.

The group said the provision in the bill capping the interest deduction for future home purchases at 500,000 US dollars – half the current amount – was unacceptable. Howard said 7 million homes are currently above 500,000 US dollars and in high-cost regions like Washington, D.C., New York City, California and Hawaii, the impact would be felt the most.

The National Federation of Independent Business, the influential small business lobby, also came out against the bill, while the US Chamber of Commerce business lobby backed it.

The legislation would also phase out tax-exempt financing for sports stadiums and subject large private universities to 1.4-percent excise tax on investment income. It would also repeal a long standing prohibition on religious institutions being involved in political activities.

The bill would create a new family tax credit and double exemptions for estate taxes on inherited assets, while also allowing small businesses to write off loan interest.

The bill would cap the maximum tax rate on small businesses and other non-corporate enterprises at 25 percent, down from the present maximum rate on “pass-through” income of 39.6 percent. It would set standards for distinguishing between individual wage income and actual pass-through business income to prevent tax-avoidance abuse of the new, lower tax level.

Source(s): Reuters