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APTOPIX Congress Taxes
Protesters shout their disapproval of the Republican tax bill outside the Senate Budget Committee hearing room on Capitol Hill in Washington, Tuesday, Nov. 28, 2017. (AP Photo/J. Scott Applewhite)

Republicans prepare to pass sweeping tax overhaul, here's what's in the bill

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After weeks of quarrels, qualms and then eleventh-hour horse-trading, Republicans revealed the details of their huge national tax rewrite late Friday.

Republican Senators Bob Corker of Tennessee and Marco Rubio of Florida announced their support for the bill after members of the House Freedom Caucus agreed to support it. Those votes all but guarantee President Donald Trump has the support needed to pass the bill next week.

The White House praised the Republican tax bill. Press Secretary Sarah Huckabee Sanders says President Donald Trump "applauds the House and Senate conferees on coming to an agreement ... and looks forward to fulfilling the promise he made to the American people to give them a tax cut by the end of the year."

Below is a review of what is in the GOP tax plan.

ADDING TO THE DEFICIT

The White House and Republicans in Congress say the plan will grow the economy and make the U.S. more competitive. However, the preliminary deficit estimate for the final version of the GOP tax bill says it would add $1.46 trillion to the budget deficit over the coming 10 years.

The true deficit cost is likely to be even higher if lawmakers extend the tax cuts for individuals before they expire at the end of 2025. This "sunset" gimmick is used to make the tax cuts more generous over the eight years they would be in force.

TAX BREAKS ARE LARGER FOR BIG BUSINESS AND THE WEALTHY

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Overall, the legislation would slash tax rates for big business and lower levies on the richest Americans in a massive $1.5 trillion bill. Benefits for most other taxpayers would be smaller.

The Joint Committee on Taxation analysis combines revenue losses from rate cuts with tax increases from repeal of deductions and other preferences. All told, cuts for individuals and businesses taxed under the code for individuals account for $1.1 trillion of the net tax cuts.

The final version of the GOP tax bill would create seven tax brackets, including a new 37 percent rate for top-end wage earners.

The new rates start at 10 percent and rise to 12, 22, 24, 32, 35 and 37 percent.

The measure also lowers the top corporate tax rate from 35 percent to 21 percent. It provides sweeping tax deductions to other businesses lowering their top effective tax rate to about 30 percent instead of 39.6 percent.

CHILD TAX CREDIT DOUBLES TO $2,000

The final version of the GOP tax bill would provide a $2,000 per child tax credit to families making up to $400,000 a year.

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That doubles the child tax credit from the current maximum of $1,000 and makes it available to a greater number of middle- and upper-bracket families.

The credit was a top priority of GOP Sen. Marco Rubio of Florida, who won a late-stage concession that would make up to $1,400 of the credit available as a tax refund to lower- and middle-income families with relatively small tax bills.

It would begin to phase out for families earning above $400,000. That's down from $500,000 in the original Senate measure, which passed earlier this month.

REPEALING OBAMACARE MANDATE

The tax bill barreling toward a final vote in Congress guts the most unpopular "Obamacare" provision, its requirement that virtually all Americans carry health insurance or face fines.

Politically, the move is a winner for Republicans, who otherwise would have little to show for seven years of rhetoric and repeated legislative efforts to kill the Affordable Care Act.

But if estimates by the nonpartisan Congressional Budget Office are right, it will lead to more uninsured people and higher premiums for those buying individual health insurance policies.

Congress may then find itself considering other ways to nudge people to get health insurance.
Other popular parts of the Affordable Care Act would remain in place, including subsidized premiums, "essential" benefits and protections for people with pre-existing medical conditions.

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KEEPING MEDICAL DEDUCTIONS

The Republican tax overhaul would keep a popular deduction for Americans with expensive medical bills.
Taxpayers can deduct medical expenses not covered by insurance when they exceed 10 percent of adjusted gross income. The threshold is 7.5 percent for taxpayers who are 65 or older.

The bill temporarily expands the medical expense deduction by applying the 7.5 percent threshold to all taxpayers in 2018 and 2019.

A return to the 10 percent threshold takes place beginning in 2020.

The House bill would have eliminated medical expense deductions, so senators ended up prevailing in negotiations.

Sen. Susan Collins, R-Maine, sought to reduce the threshold for deducting medical expenses, saying it would particularly help seniors and people with chronic conditions.

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COMMUTERS LOSE, EMPLOYERS UNABLE TO DEDUCT TRANSIT SUBSIDIES

Count commuters among the losers in the Republican tax bill that the House and Senate are expected to vote on next week.

The final bill agreed to by Republican negotiators and released late Friday eliminates the tax incentive for private employers that subsidize their employees' transit, parking and bicycle commuting expenses.

Companies currently can provide parking or transit passes worth up to $255 a month to employees as a benefit to help pay for their commuting expenses, then deduct the costs from their corporate taxes.

Businesses would no longer be able write-off $20 a month per employee to cover the expense of commuting by bicycle.

TAX PLAN WILL ALLOW ARCTIC DRILLING

A tax bill moving forward in Congress would open Alaska's Arctic National Wildlife Refuge to oil and gas drilling, a longtime Republican priority that most Democrats fiercely oppose.

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The 19.6-million-acre refuge in northeastern Alaska is one of the most pristine areas in the United States and is home to polar bears, caribou, migratory birds and other wildlife.

Alaska Sen. Lisa Murkowski and other Republicans say drilling can be done safely with new technology, while ensuring a steady energy supply for West Coast refineries.

Democrats and environmental groups say the GOP plan risks spoiling one of the nation's most pristine areas and is especially unwise at a time when U.S. oil production is booming, with imports declining and exports reaching record levels.

STOCKS CLOSE AT ALL-TIME HIGHS ON NEWS OF TAX BILL

Stocks have finished higher on Wall Street as Congressional Republicans put the final touches on a tax overhaul plan.

The gains today more than wiped out the market's losses from the day before and drove indexes to their latest all-time highs. The S&P 500 rose over 23 points to 2,675. The Dow climbed 143 points to 24,651 and the Nasdaq ended the day up 80 points to 6,936. The Russell 2000 index of small cap firms rose 23 points to 1,530.

The Associated Press contributed to this report.

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