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Senate plan would scrap income and property tax deductions

Lisa Mascaro and Jim Puzzanghera, Tribune Washington Bureau on

Published in News & Features

Administration officials signaled Thursday they would be OK with a short delay in dropping the corporate rate.

"I think the sooner we get the 20 percent rate, the better it is for the economy," Treasury Secretary Steven Mnuchin told Fox. "Obviously right away is better than a year, but a year is better than obviously a longer phase-in."

The Senate plan would preserve the current mortgage interest deduction for loans up to $1 million, rather than the $500,000 cap proposed by the House.

Like the House, it would raise the standard deductions to $12,000 for individuals and $24,000 for couples.

The Senate bill does less to simplify individual taxes, opting to keep several of the deductions that the House bill would eliminate, and maintaining seven tax brackets instead of the House bill's four.

The House plan proposed streamlining tax brackets to: 12 percent, 25 percent, 35 percent and 39.6 percent. The Senate proposes 10 percent, 12 percent, 22.5 percent, 25 percent, 32.5 percent, 35 percent and 38.5 percent.

"When you have fewer brackets, there are some people within each bracket that might get hit differently," said Sen. David Perdue, R-Ga. "By having a few more brackets, it protects against that."

Another key difference is that the Senate plan would continue taxing so-called pass-through businesses at the individual rate that would apply to the owner, currently capped at 39.6 percent. The House proposed capping the top tax rate for such entities, which includes small businesses, real estate partnerships and law firms, at 25 percent.

But to ease the tax burden on pass-throughs, most would be allowed to deduct about 17 percent of their business income from their taxes.

 

Both the House and Senate are rushing toward final passage this year on the top GOP priority.

Senators emerged from a private briefing upbeat, but not fully backing the proposal as they delve into the details.

"The goal is to raise family incomes and to unleash the tremendous potential in this country for that, and I think this proposal will do that," said Sen. Lamar Alexander, R-Tenn.

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