By Dan Calabrese ——Bio and Archives--December 14, 2017
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The corporate rate would be 21%, the people said. That is higher than the 20% rateRepublicans included in the House and Senate tax bills. It would take effect in 2018. The Senate bill had delayed that rate cut—from today’s 35%—until 2019. Mr. Trump, who had said he wanted a 15% rate, then drew a red line at 20% before expressing openness to going as high as 22%, on Wednesday said he “would be thrilled” with a 21% corporate rate. “We want to give you the American people a giant tax cut for Christmas. And when I say giant, I mean giant,” Mr. Trump said in a speech at the White House on Wednesday. “Our current tax code is burdensome, complex and profoundly unfair.” The agreement is also expected to eliminate the corporate alternative-minimum tax, the people said. Keeping that, as the Senate bill did, would have undercut the value of many popular business-tax breaks, including a research-and-development tax credit. The bill would retain the individual alternative minimum tax with exemptions for incomes up to $500,000 for individuals and $1 million for married couples, much higher than current law. Republicans are considering a 20% income deduction for so-called pass-through businesses such as partnerships and S corporations, which pay taxes through individual returns. That is lower than the 23% deduction in the Senate bill, but when combined with the lower top tax rate on ordinary income, it equates to a nearly identical 29.6% top rate on that income for pass-throughs. The bill also would include some version of House language letting pass-through firms qualify for a tax break based on their capital investment, a GOP aide said. The final agreement is expected to steer clear of some of the more controversial changes in the House plan, including taxes on graduate-student tuition waivers, the repeal of deductions for student-loan interest and medical expenses and the end of tax-free private activity bonds used for projects such as hospitals and affordable housing.
It was unclear how Republicans made these changes and stayed within the $1.5 trillion tax-cut limit they set for themselves. House and Senate negotiators have been working this week to reconcile the tax-cut bills that have passed each chamber and had been narrowing their differences. Republicans are now working on writing the legislative text of the tax bill, getting official revenue estimates and making final decisions. Votes on the final proposal could start as early as Monday as Republicans try to wrap up their work before they leave Washington for the year. The Senate is expected to vote first.
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