The House GOP tax plan, which passed on Thursday, would slash the corporate tax rate from 35 percent to 21 percent, making it the first major overhaul to hit the nation’s hotel industry since President Ronald Reagan’s 1986 tax cut.
It would also increase the mortgage interest deduction, the largest of any of the House GOP bills, from $10,000 to $50,000, but it would also lower the estate tax from $11 million to $5.8 million.
The plan would also eliminate a deduction for medical expenses, but those cuts are not retroactive to 2018.
A House Democratic aide said the plan would provide a big boost to the tourism industry and help the economy recover from the recession.
The tax cuts would be fully offset by an additional $1.3 trillion in spending cuts.
The White House says the package would create $1 trillion in new revenue, which would be passed on to consumers and businesses.
A recent report by the Congressional Budget Office predicted the tax cuts could generate $1 billion in revenue for the federal government.
The top two Republican leaders in the House of Representatives, Rep. Paul Ryan Paul Davis RyanHouse passes 4B spending bill to avert shutdown House passes $1B food stamp benefit bill to fight hunger MORE (Wis.) and Rep. Kevin Brady Kevin Patrick BradyTrump to campaign with House GOP on ObamaCare repeal: Democrats say they’ll block bill if Trump does not sign Ryan bill to ease border security and fight hunger House passes 4b spending bill in defense spending bill MORE (Texas), both backed the plan.
The Senate bill would extend the corporate rate cut through 2024, and it would provide an extra $100 billion in relief to consumers.
The House plan would cut the top rate to 25 percent in 2027, but would phase out the tax break in 2026.
The Democrats also said they would block any bill that would increase the estate and medical expenses tax.
They said the Senate bill doesn’t offer enough relief to ensure families have access to health insurance and raise taxes on the middle class.
The bill would reduce the number of taxpayers who pay taxes, but not the amount of income they pay, so the overall effect on the tax code is smaller.
House Democrats said the GOP plan could increase the deficit by as much as $1,000 for every $1 in additional revenue.
House Republicans have said the tax plan will reduce the deficit.
They argue that the tax cut is necessary to fund the government’s obligations, such as paying down the nation-building wars in Afghanistan and Iraq.
Democrats countered that the plan’s revenue projections would be off by a third or more if the tax breaks are fully phased out.