Home Business News Republican tax plan to target mortgage deduction

Republican tax plan to target mortgage deduction


Republicans have unveiled details of a controversial tax plan, aimed at slashing rates for businesses and lowering inheritance taxes.The proposal would lower the corporate tax rate from 35% to 20%, while retaining the top individual rate for the wealthiest at 39.5%.But it eliminates a popular mortgage interest deduction for new home loans of $500,000 (£380,000) or more.Delivering on the plan is a priority for Republicans and the president.They say it will make US companies more competitive and filing taxes easier for the average American family. Republicans said the bill, which would amount to about $1.5tn in cuts over a decade, was transformational.”This is our chance to make sure that generations to come don’t just get by, they get ahead in this country,” House of Representatives Speaker Paul Ryan said.Republicans said the changes will save the average American family of four about $1,182 on their tax bill.But Democrats say the plan favours corporations and the wealthy.Representative Nancy Pelosi, who leads Democrats in the House, slammed the bill as “half-baked” and said it would raise taxes on middle class.President Donald Trump and other party leaders are hoping to win approval of the bill by the end of the year.

Murky detailsBy Anthony Zurcher, BBC News, WashingtonThe Republican party’s outline of its new tax plan lists almost as many items that are going to stay the same as are being changed. That’s the nature of tax reform – every deduction and loophole has a group that will fight to preserve it.Republicans will boast that tax-deferred retirement plans, the credit for low-income workers and the charitable donations deduction are untouched. They’re playing a dangerous game, however, by targeting one cherished middle-class deduction – for interest on home mortgages. The powerful homebuilding lobby will wage a pitched effort to squash Republican hopes.The tax proposal is framed as geared toward the working and middle classes – and there is some help there – but its central focus is a corporate tax reduction that, while popular among the party’s corporate base, doesn’t excite the general public.Republicans will try to push the legislation through much the way they did healthcare reform – by keeping details murky and scheduling quick votes. Forces are already aligning against it, however, and Democrats are ready to paint the plan as a sop to the rich.Donald Trump and congressional Republicans have a lot riding on a successful effort, but the road ahead is far from easy.
Source: BBC News


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