Tax plan will cap mortgage, property deductions

Republican overhaul proposal could mean wealthy would pay more

A sweeping overhaul of the tax code unveiled by House Republicans on Thursday would cap the deduction for property taxes at $ 10,000 and preserve the mortgage interest deduction only for existing mortgages and new purchases with loans of $ 500,000 or less.

Those changes would amount to a tax increase on high- income taxpayers with pricey homes, even if they got lower income tax rates.

House Ways and Means Committee Chairman Kevin Brady, R- Texas, said the change was being made to drive tax relief to middle- income families, but it also would go to offset lower corporate rates that sponsors believe will spur the economy and job creation.

The plan maintains the existing top bracket of 39.6% for households earning more than $ 1 million, Brady said. There would be no tax charged on household income less than $ 24,000; a 12% rate would be charged on income from $ 24,000 to $ 90,000, 25% on $ 90,000 to $ 260,000, and 35% on $ 260,000 to $ 1 million, he said. Rates would be different for single people and single heads of households.

“This is the beginning of the end of this horrible tax code,” Brady said as he entered a briefing with House members early Thursday.

Brady said the plan would reduce tax revenue over the coming decade by $ 1.5 trillion, a target set in a budget resolution that both chambers approved last month. Republicans say the cuts will encourage economic growth that will offset that reduced revenue.

The plan would nearly double the standard deduction, from $ 12,700 to $ 24,000, for married couples filing jointly. The personal exemptions in the tax code now, worth $ 4,050 for each taxpayer, spouse and dependent, would be eliminated.

A new family credit of $ 1,600 would replace the existing child tax credit of $ 1,000, and there would be $ 300 credits for each parent and nonchild dependent, such as an elderly parent. The income cap for the credits also would be increased from $ 110,000 for a married couple to $ 230,000.

Retirement savings plans such as 401( k) s would be not be changed, Brady said. Taxpayers who itemize also could continue to deduct for charitable contributions, though organizations representing non- profits have warned that the higher standard deduction might make people less motivated to donate.

Brady said other deductions and loopholes would be eliminated, but details were not released.

The bill’s introduction keeps Republicans on an aggressive schedule to try to win House passage by Thanksgiving and enactment by President Trump by Christmas. But it came after two days of intense negotiations over differences within the House GOP conference, which led to decisions that might not stand when the Senate takes up the bill.

“We’re gonna get this done, you know why? Because the American people are counting on us,” said House Speaker Paul Ryan, R- Wis.

Trump, in a statement released by the White House, applauded the plan and said he was ready to fight for it.

The top corporate tax rate would be reduced immediately from 35% to 20%, and companies would be able to take an immediate write- off for investments in new equipment, retroactive to mid- September.

The plan also creates a new 25% rate for small- business owners, sole proprietors and partnerships that report business income on personal tax returns, but Brady said there would be rules to prevent abuse by wealthy people hoping to avoid the 39.6% personal tax rate.

The plan repeals the Alternative Minimum Tax.

On the estate tax, the plan would immediately double the $ 5 million exemption and phase it out.