WASHINGTON--Congressional Republicans reached a deal on final tax legislation on Wednesday, clearing the way for final votes next week on a package that would slash the U.S. corporate tax rate to 21 percent and cut taxes for wealthy Americans.
Under an agreement between the House of Representatives and the Senate, the corporate tax would be 1 percentage point higher than the 20 percent rate earlier proposed, but still far below the current headline rate of 35 percent, a deep tax reduction that corporations have sought for years.
As they finalized the biggest tax overhaul in 30 years, Republicans wavered for weeks on whether to slash the top income tax rate for the wealthy. In the end, they agreed to cut it to 37 percent from the current 39.6 percent.
That was despite criticism from Democrats that the Republican plan tilts toward the rich and corporations, offering little to the middle class. "I think we've got a pretty good deal," Senate Finance Committee Chairman Orrin Hatch told reporters.
The emerging agreement would repeal the corporate alternative minimum tax, set up to ensure profitable companies pay some federal tax, and expand a proposed $10,000 cap for state and local property tax deductions to include income tax, lawmakers and sources familiar with the negotiations said.
It was also expected to limit the popular mortgage interest deduction to home loans of no more than $750,000 and provide the owners of pass-through businesses, such as sole proprietorships and partnerships, with a 20 percent business income deduction.
The deal would gut part of the Obamacare health law by repealing a federal fine on individuals who fail to obtain health insurance, while authorizing oil drilling in Alaska's Arctic National Wildlife Refuge. Both add-on measures were part of nailing down sufficient votes for passage.
Moving the corporate tax target rate to 21 percent from 20 percent gave tax writers enough revenue to make the tax cuts immediate, Republican Senator Ron Johnson told reporters.
News of the deal began circulating just before a formal House-Senate conference committee began debating it in public, leading Democrats to decry the gathering as a sham. A final bill could be formally unveiled on Friday, with decisive votes expected next week in both chambers.
Despite expressions of confidence about passage from party leaders, the path to a final vote in the Senate could still be perilous. Republicans, who hold a 52-48 majority in the 100-seat Senate, can lose no more than two votes on the tax bill. Republican Senator John McCain, who has brain cancer, was in a military hospital to undergo treatment for the side effects of cancer therapy.
At least three other Senate Republicans still seemed to be undecided, including Arizona's Jeff Flake, who was not specific about his hesitation in brief hallway remarks to reporters.
