Republicans unveil long-awaited tax plan

House Republicans have stressed that the tax plan they unveiled Thursday is tailored to benefit America's middle class. Just how much it would remains uncertain based on the details that have been provided so far.

US President Donald Trump’s drive for the deep tax cuts that he promised as a candidate reached a major milestone on Thursday, with his fellow Republicans in the House of Representatives unveiling long-awaited legislation to overhaul the tax code.

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. 

Congressional passage of this legislation that would affect nearly every US company and family was far from certain, and some business groups quickly came out against it. 

Contentious provisions will test Republicans, who control the White House and both chambers of Congress but have been unable to deliver any major legislative achievements for Trump since the businessman-turned-politician became president in January.

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.

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.

"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.

Ryan said the typical family of four would save $1,182 annually on taxes under the bill. It promises a family with a gross income of $59,000 a tax bill of $400.

The bill consolidates the current number of tax brackets to four from seven: 12 percent, 25 percent, 35 percent and 39.6 percent, which is now the top rate and would be retained.

Largely in line with expectations for the tax-cut plan they have been developing behind closed doors for weeks, the House tax-writing Ways and Means Committee proposed roughly doubling the standard deduction for individuals and families.

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 - half the current amount - was unacceptable. Howard said 7 million homes are currently above $500,000 and in high-cost regions like Washington, DC, New York City, California and Hawaii, the impact would be felt the most.

The bill would repeal the existing deduction for state and local income and sales taxes, and would cap the deduction for state and local property taxes at $10,000. Those provisions would most affect Americans in higher-tax states such as California, New York, New Jersey, Pennsylvania and Illinois.

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.

"Ultimately, what the American people really get from this tax plan is a huge bill for the debt incurred to pay for tax breaks that line the pockets of Donald Trump personally along with his billionaire buddies. Like a Trump University degree, it is phoney," said Democratic congressman Lloyd Doggett.

The bill's architects avoided one showdown by deciding not to make changes to the popular tax-deferred retirement savings programmes, including 401(k) and IRA.

The bill is the starting gun for a frantic race toward what Trump and Republicans in the House and Senate hope will be their first major legislative victory since he took office in January: the enactment this year of a package of deep tax cuts.

“This is the beginning of the end of this horrible tax code,” House Ways and Means Committee Chairman Brady told reporters on Thursday as he entered a meeting with Republican lawmakers ahead of the bill’s release.

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

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 also 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.

It would create a new 10-percent tax on US companies’ high-profit foreign subsidiaries, calculated on a global basis, in a move to prevent companies from moving profits overseas, the Wall Street Journal reported.

Foreign businesses operating in the United States would face a tax of up to 20 percent on payments they make overseas from their American operations, the Journal added.

Trump said at the White House this week that he wanted Congress to pass the tax overhaul by the US Thanksgiving holiday on November 23.