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Tax package would lower top tax rate for wealthy Americans

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WASHINGTON (AP) — Congressional Republicans on Tuesday rushed toward a deal on a massive tax package that would reduce the top tax rate for wealthy Americans to 37 percent and slash the corporate rate to a level slightly higher than what businesses and conservatives wanted.

In a flurry of last-minute changes that could profoundly affect the pocketbooks of millions of Americans, House and Senate negotiators agreed to expand a deduction for state and local taxes to allow individuals to deduct income taxes as well as property taxes. The deduction is valuable to residents in high-tax states like New York, New Jersey and California.

Negotiators also agreed to set the corporate income tax rate at 21 percent, said two congressional aides who spoke on condition of anonymity because they were not authorized to publicly discuss private negotiations. Both the House bill and the Senate bill would have lowered the corporate rate from 35 percent to 20 percent.

Business and conservative groups lobbied hard for the 20 percent corporate rate. Negotiators agreed to bump it up to 21 percent to help offset revenue losses from other tax breaks, the aides said.

As the final parameters of the bill took shape, negotiators agreed to cut the top tax rate for individuals from 39.6 percent to 37 percent in a windfall for the richest Americans. The reduction is certain to provide ammunition for Democrats who complain that the tax package is a massive giveaway to corporations and the rich.

Under current law, the top tax rate applies to income above $470,000 for married couples, though lawmakers are completely reworking the tax brackets.