The measure has seven individual tax brackets. It also increases the child tax credit from $1,000 to $2,000, as the Senate bill did, and increases the maximum amount that is refundable to $1,400, up from $1,100 in the original Senate measure. The latter change was made to secure Republican Senator Marco Rubio’s vote.
The legislation preserves the deductions for mortgage interest and charitable giving, though it lowers the cap on the mortgage deduction from $1 million to $750,000, The Hill magazine reported. The final bill provides tax relief to pass-through businesses – entities such as small businesses whose income is taxed through the individual code – through a 20-per cent deduction.
Republicans are advancing the measure through a process called reconciliation that prevents a filibuster from Democrats in the Senate. Republicans have long wanted to rewrite the tax code, arguing that doing so would boost economic growth and lead to more job creation.
The Joint Committee on Taxation estimates the bill will lower federal revenue by $1.456 trillion over 10 years – a key finding, as the bill cannot add more than $1.5 trillion in debt and qualify for special Senate rules.
Democrats are expected to remain united in opposition against the bill. They say the measure provides most of its benefits to wealthy individuals and corporations and would end up raising taxes on some middle-class families.
