WASHINGTON — Corporations, rich individuals, and hedge fund managers are among the biggest winners in the long-awaited tax overhaul bill House Republicans unveiled Thursday, though many average Americans also would see some modest relief under the package.
Among the biggest losers — because of rollbacks on popular tax deductions for mortgage interest and state and local taxes — would be residents of states with both expensive real estate and high local income and property tax levies. Massachusetts falls squarely into that category, along with New York, New Jersey, Maryland, and other coastal blue states.
Deficit hawks look like they’re in the loser box, too, because the Republican plan would put the federal government deeper into the red through lost tax revenues.
Republicans are attempting a balancing act as they embark on the most ambitious rewrite of the tax code in three decades, while adhering to party doctrine that steep tax cuts for business will spark economic growth that benefits Americans at all income levels.
House Republicans have tried to assuage critics as they frantically crafted the details of the package behind closed doors in recent days, trying to live up to their promise to deliver a middle-class tax cut. They wound up delivering a modest cut for the middle class, while still loading up heavily on benefits to corporations and the rich.
Some of the elements made defending their plan against Democratic attacks a little easier. For instance, they kept the 39.6 percent top tax bracket for couples making more than $1 million a year.
They also took some bold gambles, most notably going after one of the most sacred cows of the tax code — the mortgage interest deduction. Their proposal would limit the threshold for the deduction to $500,000 in debt, down from $1 million. It would grandfather existing mortgages.
The move instantly angered some powerful business forces as well as GOP lawmakers representing areas with high housing costs.
Overall the plan appears to lower taxes for many Americans, in part by nearly doubling the standard deduction used by the majority of taxpayers and expanding tax credits for children and families. A typical middle class family of four would save $1,182 a year on their taxes, House Speaker Paul Ryan declared at a press conference announcing the bill, a woman holding a baby standing directly behind him.
“We’re working to give the American people a giant tax cut for Christmas . . . a big, beautiful Christmas present in the form of a tremendous tax cut,” President Trump crowed from the White House.
All of this carries a price tag of roughly $1.5 trillion over 10 years.
Democrats stuck with their chosen line of attack, pointing out that most of the help goes to the rich.
“They’re not doing tax reform. They’re doing tax giveaways to the wealthy and the powerful and telling the middle class, take a hike,” Senate minority leader Chuck Schumer of New York said. House minority leader Nancy Pelosi of California introduced a hashtag, #BillionairesFirst, on Twitter.
The bill’s release Thursday opens a new, more frenzied stage in Republicans’ push to overhaul the tax code as Democrats, lobbyists, and internal GOP critics pounce on the details. Republican leaders have set an aggressive timeline of getting a bill through both the House and Senate by Thanksgiving and a final version to the president’s desk by the end of the year.
Their job of meeting that goal got harder right out of the gate. Influential trade groups representing home builders, Realtors, and small businesses reacted to the detailed plan with statements of opposition.
“The House Republican tax reform plan abandons middle-class taxpayers in favor of high-income Americans and wealthy corporations,” said Granger MacDonald, chairman of the National Association of Home Builders and a developer from Kerrville, Texas.
The group is upset about the sharp reduction to the popular mortgage interest deduction, as well as other changes that blunt current tax incentives to buy homes.
“We’re fighting against [the bill] . . . tooth and nail in its current form,” said Jerry Howard, CEO of the influential home builder group, which has 140,000 member firms spread around the country. He warned the change “puts us at risk of a housing recession” as home values in high-cost geographic regions suffer.
Some Republican lawmakers from high-tax states including New York and New Jersey remained dissatisfied with the bill, despite a compromise on the plan’s treatment of the widely used state and local tax deduction. The bill would allow taxpayers to deduct up to $10,000 worth of state and local property taxes, but they could no longer write off state and local income taxes.
New Jersey Representative Tom MacArthur, a Republican, told reporters he wants to see the cap on property taxes raised higher than $10,000. But in a good sign for the House Republican leadership, he said he wants to find common ground.
“I’m not interested in sitting on the sideline shooting spitballs at everyone else. Voting no is the easiest thing to do around here,” he said.
The bill would slash the corporate tax rate to 20% from 35%, and make the change permanent, despite rumblings late Wednesday that the cut would be temporary. This is its biggest feature, and Republicans claim, despite a lack of historical support, that it would unleash such explosive growth that wages would rise sharply for American workers.
On the personal income tax side, the bill would reduce the number of brackets from seven to four, stretching from a bottom rate of 12 percent to a top rate of 39.6 percent. Fewer taxpayers would fall into the top bracket, however, with the highest rate applying only to households making more than $1 million a year. Couples making $470,700 to $1 million would get a cut from 39.6 percent to 35 percent.
Millionaire and billionaire hedge fund managers, private equity executives, and others would get to keep their carried-interest tax break, which allows them to have their income taxed at 23.8 percent, even though 2016 candidate Trump claimed they were “getting away with murder.”
The GOP plan would phase out the estate tax, which would almost exclusively benefit the wealthiest Americans. Currently, the tax applies to estates worth $5.49 million for an individual, $10.98 million per married couple; 90 percent of it is paid by the top 10 percent of earners, according to the nonpartisan Tax Policy Center.
The plan also would eliminate the alternative minimum tax, which prevents high-end taxpayers from claiming excessive deductions. The AMT is almost entirely paid by households making over $200,000, according to the left-leaning Center for American Progress.
Democrats and other critics on the left argue that many of the middle-class benefits being touted by Republicans aren’t as generous as they look. They also warned that the deficits the House plan would create would probably lead Republicans down the road to slash Medicare, Medicaid, and other programs that benefit lower- and middle-income Americans.
Families with lots of children, for instance, could be worse off under the GOP plan than current law, analysts say. That’s because the GOP bill would eliminate personal exemptions that taxpayers today can claim for themselves, their spouses, and each dependent in their household — worth $4,050 each.
The new bill offers a more generous child tax credit of $1,600 — up from $1,000 — per child, and raises the income cap on who can claim it, plus a new “family credit” of $300 for each parent and non-child dependent in a household. And the $300 credit would expire after 2022.
Those breaks are still not enough to make larger families whole, analysts said.
‘‘Tax cuts for the well-off are forever,’’ said Gene Sperling, a former Barack Obama economic aide. ‘‘Tax cuts for the middle class are small, a maybe and sometime thing that can be cut off in their plan.’’Victoria McGrane can be reached at victoria.mcgrane@
globe.com. Follow her on Twitter @vgmac.