WASHINGTON _ Republicans finished the final version of their tax overhaul Friday, slightly expanding a child tax credit to win support from holdout Sen. Marco Rubio, but also scaling back aspirations to create a simpler code that would allow Americans to file returns on a postcard.
After the changes, Rubio, R-Fla., who had threatened to vote against the measure Thursday, said he would now support it.
The final text set to be released later Friday _ ahead of next week's scheduled votes _ permanently lowers corporate rates from 35 percent to 21 percent. It drops rates for many individuals too, but those cuts will expire in 2025.
The new top individual rate, 37 percent, will kick in at household annual income levels of around $500,000, slightly above today's $470,000 threshold for the top 39.6 percent rate, according to a Republican granted anonymity to discuss the plan. But that income level is far from the $1 million cutoff once envisioned by Republicans, who face criticism that the bill favors the wealthy and corporations.
The $1.5 trillion in net cuts, drafted without Democrats, is expected to fundamentally change the tax code by repealing many popular deductions, including capping the state and local tax write-off at $10,000 and limiting mortgage interest deductions to loans up to $750,000. Those changes are likely to hit hardest in high-cost states, where property and state income tax deductions are widely used.
It doubles the standard individual deduction to $24,000 for couples, but also does away with the $4,050 per-person personal exemption used by many Americans to lower their tax bills.
On the business side, negotiators Friday pushed the corporate repatriation rate to near 15 percent on firms that bring overseas profits back to the United States, higher than the 10 percent rate once envisioned, or 14 percent in an earlier compromise, as they searched for additional revenue to cover the costs of other changes.
Final negotiations also abandoned several high-profile GOP provisions that ran into steep resistance. Among those things not included in the final bill is the proposed taxation of in-kind tuition payments for graduate students and the proposed repeal of deductions for private equity bonds used by municipalities to finance public projects.
The package also keeps in place a decades-old tax rule Republicans wanted to repeal, the so-called Johnson amendment, which limits the ability of churches and nonprofits to engage in political activity.
Winning back Rubio's support with the enhanced child tax credit was crucial as Republicans can lose no more than two votes for passage in the Senate, where they have a narrow 52-48 majority. Vice President Mike Pence is expected to be on hand next week in case he is needed to break a tie.
Negotiators met Friday morning to finish the bill before its release, and said they were optimistic they had the votes for passage in the House and Senate, meeting President Donald Trump's push for completion by Christmas.
"I'm confident both chambers will pass it next week," said Sen Pat Toomey, R-Pa.
Rubio's office confirmed his support.
"For far too long, Washington has ignored and left behind the American working class," Rubio tweeted, and said the changes were "a solid step toward broader reforms."
Sources said the change would increase the refundability of the child tax credit, which Rubio and Sen. Mike Lee, R-Utah, had been able to increase from $1,000 to $2,000 per dependent under the bill, allowing as much as $1,400 to be refunded to working-class Americans if they don't owe beyond their payroll taxes. Earlier, just $1,100 would be refunded.
Rubio had argued that was unfair to low- and moderate-income workers who might not pay enough in taxes to take full advantage of the credit.
Republicans are trying to pass the bill on their own, without Democrats. Critics say it still leans too heavily in favor of corporations and the wealthy without much improvement for middle-class Americans.
The bill allows a new 20 percent income deduction for so-called pass-through businesses, including mom-and-pop shops but also bigger firms that organize as sole proprietors, as Trump does.
It also includes a provision to open part of the Arctic National Wildlife Refuge to oil and gas drilling, which has been a priority for Sen. Lisa Murkowski, R-Alaska.
And it would repeal the requirement under the Affordable Care Act that all Americans have health insurance.
Despite polling showing the bill is unpopular among Americans, Republicans remained confident it will gain support once the cuts are implemented.
"The benefits will go primarily to people in the middle class," said Sen. Rob Portman, R-Ohio. "The burden of taxation will continue to be much like it is now. In other words, it's a progressive tax code. You make more money, you pay more in taxes."
