House and Senate GOP leaders forged an agreement Wednesday on a sweeping overhaul of the nation's tax laws, paving the way for final votes next week to slash taxes for businesses and give many Americans modest tax cuts starting next year.
Top GOP aides said lawmakers had reached an agreement in principle on the final package. They spoke on condition of anonymity because they were not authorized to talk publicly about private negotiations.
Details still need to be drafted and assessed by congressional scorekeepers, but the final House-Senate compromise is on track to be unveiled this week, the aides said.
Asked if there is a deal in principle on the tax cuts, Sen. Orrin Hatch, R-Utah, said, "It's more than that. I think we've got a pretty good deal."
The measure would give President Donald Trump his first major victory in Congress. It fulfills a longstanding goal by top Republicans such as Speaker Paul Ryan to rewrite the loophole-cluttered tax code.
The measure has come under assault by Democrats who say it is unfairly tilted in favor of business and the wealthy.
Top Senate Democrat Chuck Schumer said Wednesday GOP leaders should pump the brakes on taxes and delay a final vote until Sen.-elect Doug Jones, D-Ala., is sworn in.
"It would be wrong for Senate Republicans to jam through this tax bill without giving the newly elected senator from Alabama the opportunity to cast his vote," Schumer told reporters. "That's exactly what Republicans argued when (former Massachusetts GOP Sen.) Scott Brown was elected in 2010."
Back then, the issue was a sweeping overhaul of the nation's health care system that Democrats muscled through Congress in March 2010.
Trump was making a pitch Wednesday for the tax plan, which is unpopular with many. He will offer what aides called a "closing argument to the American people." Trump planned to deliver the speech from the Grand Foyer, the entrance of the White House mansion, laying out how the tax changes would specifically benefit the middle-class families in attendance from Pennsylvania, Ohio, Virginia, Iowa and Washington state.
The speech comes as the White House has sought to push back against polling suggesting the public views the plan as heavily tilted toward corporations and wealthy Americans. Trump has asserted that the plan will lower tax rates for individuals and spur job growth, helping American families.
The total amount of tax breaks in the legislation cannot exceed $1.5 trillion over the next decade, under budget rules adopted by the House and Senate. The legislation would add billions to the $20 trillion deficit.
Once the plan is signed into law, workers could start seeing changes in the amount of taxes withheld from their paychecks early next year, lawmakers said — though taxpayers won't file their 2018 returns until the following year.
In a flurry of last-minute changes that could profoundly affect the finances of millions of Americans, House and Senate negotiators agreed to expand a deduction for state and local taxes to allow individuals to deduct income taxes as well as property taxes. The deduction is valuable to residents in high-tax states like New York, New Jersey and California.
Negotiators also agreed to set the corporate income tax rate at 21 percent, said two congressional aides who spoke on condition of anonymity because they were not authorized to publicly discuss private negotiations. Both the House bill and the Senate bill would have lowered the corporate rate from 35 percent to 20 percent.
Business and conservative groups lobbied hard for the 20 percent corporate rate. Negotiators agreed to bump it up to 21 percent to help offset revenue losses from other tax breaks, the aides said.
As the final parameters of the bill took shape, negotiators agreed to cut the top tax rate for individuals from 39.6 percent to 37 percent in a windfall for the richest Americans. The reduction is certain to provide ammunition for Democrats who complain that the tax package is a massive giveaway to corporations and the rich.
The top tax rate currently applies to income above $470,000 for married couples, though lawmakers are completely reworking the tax brackets.
Sen. Susan Collins, R-Maine, who has previously expressed opposition to reducing the rate for the wealthiest earners, acknowledged Tuesday that the negotiators appear to have agreed on the move. "I don't think lowering the top rate is a good idea," Collins said.
She didn't threaten to vote against the final bill, however, if it included a lower rate, saying "I'm going to wait and look at the entire conference report and see what all the provisions are."
Among the other tax breaks, negotiators agreed to eliminate the alternative minimum tax for corporations, a big sticking point for the business community, the aides said. They also agreed to let homeowners deduct interest on the first $750,000 of a new mortgage, down from the current limit of $1 million.
Both the House and Senate bills would scale back the deduction for state and local taxes, limiting it to $10,000 in property taxes. California Republicans have pushed to amend the bill to enable individuals to deduct state and local income taxes as well as property taxes. Rep. Pete Sessions, R-Texas, chairman of the House Rules Committee, said there is an agreement on how to address the issue, though he wasn't specific.
The House bill would limit the mortgage interest deduction to the first $500,000 of a new mortgage, while the Senate bill would keep the current limit of $1 million. Two congressional aides said negotiators have agreed to split the difference.
The provision would not affect current mortgages.
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