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Senate GOP Unveils Tax Bill With More Pain for Blue States

Senate GOP Unveils Tax Bill With More Pain for Blue States

The Senate Finance Committee is expected to start its work on the tax plan next week, with a full Senate vote likely after the week-long Thanksgiving break.

The House measure, meanwhile, nears approval by the tax-writing committee after last-minute changes by its primary author. That means homebuyers would continue to be able to deduct interest payments on loans of up to $1 million as permitted under current law; the House bill would reduce the limit to $500,000.

The release of the Senate bill sets the stage for talks among the White House, Senate and House to reach agreement on a final bill in the weeks ahead.

And unlike the House version, the Senate bill would fully repeal the deduction for state and local taxes, which has become a sticking point with GOP congressmen from high-tax states like NY and New Jersey, whose constituents depend on that deduction. But the Senate already seemed unlikely to meet that deadline because of complex rules governing how it must consider the tax bill. The Senate bill, by the way, keeps the same name.

The House bill, called the Tax Cuts and Jobs Act, cuts the corporate tax rate from 35 percent to 20 percent, while moderately reducing household income-tax rates.

All the details from the Senate's version of the bill are not out yet, but a senator from South Dakota says that it does preserve the tax credit for electric cars. But he also lamented that the legislation would not do things like repeal Obamacare's individual mandate.

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The Senate bill would reduce the number of wealthy people who pay the estate tax by doubling the current threshold for the tax, which now kicks in for individuals on estates worth over $5.6 million.

Both would increase a child tax credit, though not to levels sought by Sens. Both versions would retain an adoption tax credit that had initially been eliminated in the House bill, but that adoption advocates fought to restore. On Tuesday, two Republicans had said the bill would retain the seven brackets but cautioned that changes were possible. Republicans contend that the tax reductions will help the middle class, even though some independent analyses have found that the wealthy and corporations benefit disproportionately.

Republicans are attempting to pass their tax overhaul using a process known as budget reconciliation.

The bill can only add $1.5 trillion to the deficit over the next 10 years, but the current version adds $74 billion more than that.

Senate Finance Committee aides told The Washington Post that they would need to make adjustments to the legislation because it doesn't now meet the requirement that it not add to the debt after 10 years.