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GOP Unveils Massive Tax Cut Plan

WASHINGTON — House Republicans unveiled their long-awaited tax cut legislation on Thursday, kicking off a fight that many in the GOP believe they must win to preserve their congressional majorities in the midterm elections next year.

House Speaker Paul Ryan, R-Wis., and GOP tax writers put forward a bill that would trim the number of tax brackets, while raising the standard deduction from $6,350 to $12,000 for individuals and from $12,700 to $24,000 for married couples.

The Tax Cuts and Jobs Act, which is subject to change and faces lingering questions of how it will be paid for, would cut the corporate tax rate to 20 percent from 35 percent, while eliminating the estate tax after six years.

Republicans Race to Pass Tax-Cut Plan 2:08

The bill also repeals the deduction for state and local income taxes while limiting the deduction for property taxes to $10,000, preserves pre-tax 401(k)s and IRAs, and expands the child tax credit from $1,000 to $1,600.

It allows homeowners to keep their mortgage interest deduction, but caps the deduction for new mortgages at $500,000.

READ: The full GOP tax bill here

Republican leaders beamed as they took turns praising the roughly 400-page bill in the gilded chambers of the House Ways and Means Committee, which has responsibility over the tax code.

Rep. Kevin Brady, R-Tex., the committee's chairman and the GOP point man on taxes, said the legislation has the support of President Donald Trump, whom GOP lawmakers will visit at the White House for a celebratory photo op later in the day.

Brady added that passing a tax bill would be a way for Republicans to quiet the Washington naysayers and show the American people that the GOP can deliver on its promises.

"None of them thought we would get this far on tax reform," he said of critics. "Now you are going to prove them wrong."

Ryan said the bill would save a typical family of four as much as $1,182 a year and make it possible for Americans to do their taxes on a form the size of a postcard.

"We're going to get this done because we told the American people this is what we were going to do to if we get in the majority," he said on a day that happened to mark the seventh anniversary of the GOP takeover of the House.

In a statement, Trump said the bill would boost economic growth and he urged to Republicans to buckle up for a fight.

"We are just getting started," the president said. "The special interests will distort the facts, the lobbyists will try to save their special deals, and some in the media will unfairly report on our efforts."

Trump also told reporters he expects to have the bill done by Christmas.

Under the new brackets, taxpayers who make less than $24,000 a year would pay no income tax, those who make under $90,000 would pay 12 percent, those under $260,000 would pay 25 percent, and those under $1 million would pay 35 percent. Income over $1 million would still be taxed at the current top rate of 39.6 percent.

Image: Trump holds an example of what a new tax form may look like during a meeting
President Donald Trump holds an example of what a new tax form may look like during a meeting on tax policy with Republican lawmakers in the Cabinet Room of the White House on Nov. 2, 2017, in Washington, with House Speaker Paul Ryan, R-Wis., and Chairman of the House Ways and Means Committee Rep. Kevin Brady, R-Texas, right. Evan Vucci / AP

The bill also makes good on a longstanding conservative goal to repeal the so-called Johnson Amendment, which prohibits non-profit organizations like churches from directly endorsing or opposing political candidates.

Sticking points, however, emerged immediately in a bill whose release had been delayed by a day as negotiators hammered out details late into the night Wednesday. The proposed changes to the mortgage interest deduction, for instance, sent home builder stocks tumbling as related industry groups came out against the bill.

And it remains to be seen if the compromise over the deduction for state and local taxes (SALT), which tax writers want to repeal, will appease enough Republican lawmakers from high-tax states, who could be the crucial swing votes for a bill expected to have little margin for error.

While the California delegation bit its tongue, perhaps owing to the influence of House Majority Leader Kevin McCarthy, R-Calif., a number of Republicans from New York and New Jersey said they couldn't support the current bill, citing both the state and local tax deduction issue and the mortgage deduction provision.

Lawmakers from both states are working together to increase their leverage, but Rep. Frank LoBiondo, R-N.J., who came out against the bill, said he's concerned there are not enough of them. "I’m worried that the problem for my constituents doesn’t get fixed and their taxes go up," he told reporters.

"I want to get to yes,” Rep. Tom MacArthur, R-N.J., told reporters. "But it has to be right and I have see that this is not taking advantage of some states to the benefit of others.”

The concerns were a major topic of discussion at a lunch with Ryan after the bill was made public, MacArthur said, and he credited leadership for moving in the right direction, but said he still want to see the property tax deduction moved up to $12,500 from $10,000, along with other costly changes.

Objections inside the party also led to a last-minute change on the corporate tax rate cut, making it permanent instead of temporary.

Still, the Federation of Independent Business, a powerful group that typically sides with Republicans, said the plan "leaves too many small businesses behind," while the U.S. Chamber of Commerce said, "a lot of work remains to be done," even though they support the bill over all.

The bill does not include a repeal of the Affordable Care Act's individual healthcare mandate, which Trump called for in a tweet this week, but Republicans left the door open to adding it later, which they say could save $300-400 million.

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"I am optimistic that there is a overwhelming consensus in the GOP conference that the individual mandate ends up in the House bill," said Mark Meadows, R-N.C., the chairman of the conservative House Freedom Caucus.

The Ways and Means Committee plans to revise the bill next week as the GOP moves toward passage in the House later this month. The Senate is working on its own bill, which would have to be reconciled with the House version before a final piece of legislation gets sent to Trump's desk.

Reforming the tax code, where an interest group lurks behind every loophole, is always a challenge, explaining why it's been over 30 years since the last major changes.

Republicans are starting off on the their back foot, with a new NBC News/Wall Street Journal poll showing the plan is unpopular and there's also limited time left on the calendar before their self-imposed end-of-the-year deadline to get the bill passed.

Tens of millions of millions of dollars are likely to be spent by both sides in the tax fight, not to mention the swarm of lobbyists from industry groups expected to descend on Capitol Hill.

The conservative American Action Network said it will spend $50 million promoting the plan, while progressive group have vowed to fund major campaigns against it.

The liberal Not One Penny coalition responded to the bill's unveiling by launching a six-figure ad buy that features a Republican farmer from Kansas saying his state's troubled tax cut experiment should be a warning to the GOP in Washington.

"The promises were we were going to have all these new jobs, that everybody would reinvest their tax cuts — it was abject failure," Mike Fawl says as he feeds his cows. "What was tried here didn't work. I don't know how you could expect different results. "

And Democratic leaders suggested they have no interest in compromise.

"I’m not going to rest until this bill dies," Senate Minority Leader Chuck Schumer, D-N.Y., said at at a rally outside the Capitol on Wednesday.