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From left, Rep. Carlos Curbelo (R-FL) R-Fla., Rep. Vern Buchanan (R-FL) and House Ways and Means Committee Chairman Kevin Brady (R-TX). Photo: J. Scott Applewhite / AP

House Republicans are six days away from unveiling the details of their tax plan, and just four days away from most GOP members getting to learn what's actually in it. But multiple sources familiar with the process say that there will indeed be proposed changes to the deductibility of corporate interest.

Why it matters: The move could eat into returns for many private equity and real estate investment funds, although the reduction won't be as deep as some had feared.

Specifics: The current talk is to reduce the current 100% deduction down to 70%, with an expectation that the extra 30% would be taxed at the new statutory corporate rate. There is an expectation that existing debt would be grandfathered in, and transition rules may include grandfathering for debt that is in process as of the Nov. 1 roll-out (if that last part proves out, expect a massive surge in leveraged loan soft launches).

Caveat: Interest deductibility is viewed by the GOP as one of its few remaining ways to pay for tax cuts, and the 70/30 plan was devised in concert with 401(k) caps. If the 401(k) plan gets scrapped over Trump's tweet threats, then it's possible the deductibility limit could climb.

Magic number is 25%: That's the statutory rate at which many LBO shops are said to believe the deducibility cuts would effectively balance out. Any lower (i.e., the floated 20%), then the private equity bigs view this as an overall win. Any higher, and returns will suffer.

Go deeper

3 hours ago - Politics & Policy

Kellyanne Conway's parting power pointers

Kellyanne Conway addresses the 2020 Republican National Convention. Photo: Nicholas Kamm/AFP via Getty Images

Kellyanne Conway has seen power exercised as a pollster, campaign manager and senior counselor to President Trump. Now that his term in office has concluded, she shared her thoughts with Axios.

Why it matters: If there's a currency in this town, it's power, so we've asked several former Washington power brokers to share their best advice as a new administration and new Congress settle in.

3 hours ago - Politics & Policy

GOP holdouts press on with plans to crush Cheney

Screenshot of emails to a member of Congress from individuals who signed an Americans for Limited Government petition against Rep. Liz Cheney. Photo obtained by Axios

Pro-Trump holdouts in the House are forging ahead with an uphill campaign to oust Rep. Liz Cheney as head of the chamber's Republican caucus even though Minority Leader Kevin McCarthy told them to back down.

Why it matters: What happens next will be a test of McCarthy's party control and the sincerity of his opposition to the movement. Cheney (R-Wyo.) is seen as a potential leadership rival to the California Republican.

Democrats aim to punish House GOP for Capitol riot

Speaker Nancy Pelosi passes through a newly installed metal detector at the House floor entrance Thursday. Photo: Drew Angerer/Getty Images

House Democrats plan to take advantage of corporate efforts to cut funding for Republicans who opposed certifying the 2020 election results, with a plan to target vulnerable members in the pivotal 2022 midterms for their role in the Jan. 6 violence.

Why it matters: It's unclear whether the Democrats' strategy will manifest itself in ads or earned media in the targeted races or just be a stunt to raise money for themselves. But the Capitol violence will be central to the party's messaging as it seeks to maintain its narrow majorities in Congress.