TAX OVERHAUL | GOP tax plan may offer little aid for many in middle class

WASHINGTON (AP) — House Republicans have stressed the tax plan they unveiled today is tailored to benefit America's middle class. Just how much it would remains uncertain based on the details that have been provided so far.

The plan promises tax savings next year of $1,182 for a typical household of four with gross income of $59,000, leaving their tax bill at $400.

"We are focused on increasing paychecks in a major way," said Rep. Kevin Brady, the Republican chairman of the House Ways and Means Committee.

But the proposal's conflicting provisions and phase-outs of certain benefits suggest that taxes could rise for some middle-class earners over time. And for many, the income gains being touted by President Donald Trump are unlikely to materialize.

Some of these complications arise because under the budget instructions, the planned tax cuts can't increase the national debt by more than $1.5 trillion over the next decade. Anything above $1.5 trillion would force Republicans to amend their plan to generate more revenue – a change that would likely prove difficult.

What seems clearer is the tax plan's primary beneficiaries would be wealthier Americans because they would enjoy lower tax rates despite the elimination of some tax breaks.

"With the details they've presented to us so far, it looks like the tax cut benefits the wealthy and major corporations," said Martin Sullivan, chief economist at Tax Analysts and a former staff economist at the Treasury Department. "In fact, if you have a large family, given the facts that we have now, that you would pay more in taxes."

Here's why:

A married couple making less than $90,000 would be taxed at a 12 percent rate, instead of the current 15 percent. The size of their standard deduction would nearly double to $24,000.

But that same couple would lose personal exemptions – deductions that largely benefit families with multiple children. The child tax credit would rise to $1,600 from $1,000 – short of the $2,000 that Sullivan said would be needed to make many families whole.

11:10 a.m.

WASHINGTON (AP) — House Republicans would preserve the popular retirement account for middle-class Americans while limiting a cherished deduction for homeowners in a sweeping tax cut plan unveiled today that would add $1.5 trillion to the nation's debt.

GOP leaders briefed rank-and-file lawmakers on the proposal this morning ahead of a formal rollout and a show of unity event at the White House with President Donald Trump. A major revamp of the tax code, the first in three decades, is a top legislative and political priority of Republicans.

Details were contained in a summary obtained by The Associated Press.

The proposal would leave intact the existing rules on 401(k) retirement accounts and the ability of Americans to contribute up to $18,000 into the accounts tax-free.

But the plan limits the widely used deduction for mortgage interest for newly purchased homes at up to $500,000, a sharp reduction from the current $1 million cap.

The plan also limits the amount you can deduct for local property taxes to $10,000 while eliminating the deduction for state income taxes, which generated significant opposition from Republicans in high-tax states such as New York and New Jersey.

"I view the elimination of the deduction as a geographic redistribution of wealth, picking winners and losers," said Rep. Lee Zeldin, R-N.Y., who represents eastern Long Island. "I don't want my home state to be a loser, and that really shouldn't come as any surprise."

The child tax credit would be increased from $1,000 to $1,600, though the $4,050 per child exemption would be repealed.

The legislation is a longstanding goal for Capitol Hill Republicans who see a once-in-a-generation opportunity to clean up an inefficient, loophole-cluttered tax code. But there is lingering opposition from northeastern Republicans fearful of losing a cherished deduction for state and local taxes and anxiety among other rank-and-file lawmakers over emerging details.