House and Senate GOP leadership have reached a preliminary deal on the tax bill. While the deal harmonizes provisions that have passed both the Senate and House, it is possible that it will raise the ire of some legislators who advocated a different direction for reform.
The new bill would reduce the corporate tax rate to 21 percent, rather than the original 20 percent, in order to fund a reduction of the top individual tax rate to 37 percent.
It also reduces the tax deduction for pass-through companies (the majority of businesses, which are taxed through the owners’ personal taxes) to 20 percent, down from 23 percent in the original bill. The effect of this change will be reduced somewhat by the change in top tax rate; this is because pass-through business taxes are essentially the individual rate minus the deduction, so in this case it would be 27 percent.
The mortgage interest deduction will be retained, though capped at $750,000. It is not clear whether the new bill will grandfather existing mortgages (as the House bill did) or eliminate the deduction for equity interest (as the Senate bill did).
A more detailed announcement should be coming later today.