WASHINGTON — Tax cuts for many families would be temporary but a cut in the top corporate rate would be permanent under a revised Republican tax plan unveiled Tuesday night by the Senate Finance Committee.
The plan also eliminates the mandate, imposed under the Affordable Care Act or Obamacare, that people have health insurance.
That change will increase the number of people without insurance by 13 million by the end of the decade and raise rates on those who continue to get subsidized coverage through federally managed exchanges, the Congressional Budget Office estimated. But eliminating the mandate will also save the government about $338 billion over the coming decade because of lower spending for Medicaid and subsidies.
The Senate plan would apply those savings to increasing the child tax credit, making more so-called "pass-through" businesses eligible for a new deduction, and lowering individual tax rates even further than a proposal released last week.
Making the tax cuts for individuals expire after 2025 would help the tax plan survive a challenge under Senate budget rules that could have required 60 votes for passage. Republicans control 52 seats in the Senate.
House Speaker Paul Ryan has said that temporary tax cuts in a House bill were put there solely to get around the Senate rule, and he fully expects the cuts to be extended.
But Senate Minority Leader Chuck Schumer, D-N.Y., said that Republicans can't vote for a bill that says the tax cuts will expire while promising taxpayers they won't.
"Either tens of millions of taxpayers will pay significantly more the longer this plan is in effect, or a future Congress will extend the tax breaks, making the deficit hole they create massively deeper," Schumer said. "Our Republican colleagues, particularly the deficit hawks, can't have it both ways."
Under the new Senate plan, the child tax credit, which is currently $1,000 and phases out when income exceeds $110,000, would grow to $2,000, with eligibility for couples making up to $500,000.
Three tax rates were also shaved further: From 22.5% to 22% for joint filers with incomes between $77,400 and $140,000; from 25% to 24% for joint filers between $140,000 and $320,000; and from 32.5% to 32% for joint filers between $320,000 and $400,000.
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The plan also modified a proposed 17.4% deduction that could be applied to income earned by "pass-through" businesses whose owners pay taxes on their personal returns rather than a corporate return. The original plan last week had an income cap of $150,000 for the special break, and the new plan would raise it to $500,000 for couples.
An analysis of the original Senate plan by the Joint Committee on Taxation said that while 60% of all taxpayers would pay at least $100 less in taxes, 31% would pay about the same and 9% would pay more.
Those paying at least $500 more next year would include 10% of those making $75,000 to $100,000, and 16% of those making $100,000 to $200,000. Factors contributing to that are the Senate plan's elimination of personal exemptions, currently worth $4,050 each for taxpayer, spouse and dependents, and the deduction for state and local income, sales and property taxes.
Senate Finance Committee Chairman Orrin Hatch, R-Utah, said the changes were endorsed by the National Federation of Independent Business, a powerful lobbying group.
The Finance Committee began hearings Monday on the previous measure, and will continue work on it Wednesday, with the Senate expecting to take up the tax bill on the floor after Thanksgiving. In the House, the Rules Committee on Tuesday night sent its tax bill— which has different rates, credits, deductions and rules for businesses — to the floor with no changes, setting up a vote on passage there on Thursday.
The competing measures, if approved in each chamber, would have to be reconciled and — approved again by the Senate and House — before a final bill could be sent to President Trump.