WASHINGTON (AP) - House Republicans unveiled a $1.5 trillion tax plan that cuts the corporate rate, lowers the personal tax rate of most Americans and eliminates or limits some prized deductions. A look at provisions of the proposal:
-Income tax rates: Sets four new income tax rates: 12 percent, 25 percent, 35 percent and 39.6 percent. The 25 percent rate would start at $90,000 for married couples and $45,000 for individuals; the 35 percent rate would apply to family income exceeding $260,000 and individual income over $200,000 - which means many upper-income families whose top rate is currently 33 percent would face higher taxes. The current 39.6 percent top rate would apply to individual income exceeding $500,000 and earnings exceeding $1 million for married couples.
-Nearly doubles the standard deduction to $12,000 for individuals and $24,000 for couples, which means significantly fewer taxpayers would itemize deductions like mortgage interest.
-Limits the mortgage interest deduction for new home loans to the first $500,000 of the loan, instead of the current $1 million limit. Eliminates the deduction for second homes.
-Eliminates the deduction for state and local income taxes, and caps the deduction for state and local property taxes at $10,000.
-Families: Eliminates personal exemptions of $4,050 for each family member. Repeals itemized deductions for medical expenses, alimony payments for divorces after 2017, moving expenses. Workers would owe taxes on the amount of employee achievement awards, and on employer-provided assistance for adoptions and for caring for children or disabled family members.
-Tax credits: Increases the per-child tax credit from $1,000 to $1,600 and extends it to families earning up to $230,000. There's also a new $300 tax credit for each adult in a family.
-Business taxes: Cuts the top tax rate for corporations from 35 percent to 20 percent. Lowers to 25 percent the rate for many "pass-through" businesses, whose profits are taxed at the owners' individual rate, though service businesses such as law firms wouldn't be eligible.
-Multinational corporations: Establishes a 10 percent tax on profits for overseas subsidiaries of U.S. corporations and seeks to prevent tax gamesmanship that has moved U.S. companies overseas. Permits "repatriation" back to the U.S. of profits stockpiled overseas at a one-time 12 percent rate. Tightens tax rules on U.S. operations of foreign companies.
-Eliminates medical expense deductions, which would affect families dealing with a member living in a nursing home.
-Education: Repeals Hope Scholarship Credit and Lifetime Learning Credit for higher education, repeals tax deduction for interest payments on student loans and the tax exclusion for employer-provided education assistance. Also lets people designate fetuses as beneficiaries of 529 accounts, which are savings programs for college costs.
-AMT: Repeals the alternative minimum tax, a parallel tax structure aimed at ensuring that all people pay at least some tax. It has been criticized for excessive complexity.
-Estate inheritance tax: Immediately doubles the exemption of large estates from $11.2 million to $22.4 million and repeals the estate tax entirely after six years.
-Sports: Repeals the charitable deduction for money spent for the right to buy tickets to college sports events. Ends the tax exclusion for interest on bonds issued by state and local governments to build professional sports stadiums.
-Eliminates the tax credit small businesses have received for easing physical access to their offices for disabled people.
-Reduces the tax credit for companies for producing electricity from alternative sources like wind and solar energy.
Area lawmakers react to plan
Area lawmakers respond to U.S. House tax-overhaul plan:U.S. Sen. Bob Corker, R-Tenn.: "I cannot stress enough that what I care about is doing this right and implementing sound policy. As I have made clear from the beginning of this debate, it is my hope that the final legislation – while allowing for current policy assumptions and reasonable dynamic scoring – will not add to the deficit, sets rates that are permanent in nature, and closes a minimum of $4 trillion in loopholes and special interest deductions."U.S. Sen. Lamar Alexander, R-Tenn.: "You don't need to be an accountant to know that our tax code is too complicated, takes too many dollars away from Tennesseans and makes it harder to create good-paying jobs. The House ... is taking a critical step today toward enacting tax reform this year and I look forward to reviewing their proposal. I will continue working with President Trump, Chairman Hatch, and my colleagues in the House and Senate to help create a simpler and fairer pro-growth tax system that will keep more money in Tennesseans' pockets and grow Tennessee jobs."U.S. Rep. Chuck Fleischmann, R-Tenn.: "This plan greatly simplifies our tax code and will ensure hardworking Tennesseans keep more money in their pockets. Additionally, this plan finally addresses the burdensome taxes on our businesses that have stifled growth and led to more and more of our jobs being shipped overseas. ... The Tax Cuts and Jobs Act presents a tax plan that works for, not against, American families and businesses."U.S. House Budget Committee Chairman Diane Black, R-Tenn.: "Today, we took action to present comprehensive tax relief that lowers rates, simplifies the code and gets rid of loopholes so that American families get relief from the crushing burden of high taxes. ... Our goal has always been to relieve the tax burden on middle income families so they can save for the future with a simpler and fairer system."President Donald Trump: "I called Diane Black and you came through, Diane."U.S. Rep. Steve Cohen, D-Tenn.: "We worked hard to get [state] sales taxes deductible. The GOP plan eliminating the deductibility of sales taxes would take money out of Tennessee. If you can't deduct it, it goes to Washington."