Republicans have unveiled details of a sweeping tax plan, aimed at slashing rates for businesses and lowering inheritance taxes.

The proposal would lower the corporate tax rate from 35% to 20%, while retaining the top individual rate for the wealthiest at 39.5%.

It eliminates a popular mortgage interest deduction for new home loans of $500,000 (£380,000) or more.

Delivering on the plan is a priority for Republicans and the president.

Republicans said the bill, which is estimated to cost about $1.51tn over a decade, is transformational.

They say it will make US companies more competitive and simplify the tax-filing process for the average American family.

"This is our chance to make sure that generations to come don't just get by, they get ahead in this country," House of Representatives Speaker Paul Ryan said.

The most costly part of the plan is the reduction of the corporate rate.

Republicans said the bill also provides "relief" for ordinary Americans.

They said the changes will save the average family of four about $1,182 on their tax bill.

President Donald Trump and other Republican party leaders are hoping to win approval of the bill by the end of the year.

Mr Trump called it a "big, beautiful Christmas present" for families.

But Democrats say the plan favours corporations and the wealthy.

Representative Nancy Pelosi, who leads Democrats in the House, slammed the bill as "half-baked" and said it would raise taxes on the middle class.

Who are the winners and losers?

Winners: Corporations and businesses

The bill slashes the corporate tax rate from 35% to 20%. That's expected to reduce revenue by almost $1.5tn from 2018-2027.

The bill also sets a 25% top tax rate for income from certain businesses that is taxed at the personal rate - a further $500bn reduction in revenue.

Winners: Wealthy heirs

Under current law, inheritances over $5.49m face a 40% tax rate. The Republican proposal would immediately double the amount excluded from taxes to $11.2m and repeal it entirely in 2024.

The committee expects that to reduce revenue by $172.2bn through 2027.

Losers: Wealthy homeowners in Democratic states

Current law permits taxpayers to deduct interest paid on mortgages up to $1m. The Republican proposal would cap that at $500,000.

Trade groups for home builders and realtors oppose the shift, but the change is favoured by some left-leaning groups, including the National Low Income Housing Coalition.

The organisation estimates that only about 5% of mortgage-holders in the US would be affected.

Many of those mortgage-holders are concentrated in high-cost, coastal states, such as California, New York, New Jersey, Massachusetts and Maryland.

In California, for example, more than 16% of home loans exceeded $500,000, compared to less than 1% in Iowa.

Many of those homeowners would also likely be hit by the $10,000 cap imposed on local property tax deductions.

Many of the states most affected are strongholds of Democratic voters and home to Democratic leaders, including Nancy Pelosi and Chuck Schumer.

The change would also raise revenue, but the committee did not estimate the specifics of the provision.

Losers: Ivy League universities

The bill would impose a 1.4% tax on investment income earned by certain private colleges and universities.

The shift is expected to raise $3bn over a decade.

Source:
courtesy of BBC NEWS

by BBC NEWS

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