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Finally, a GOP tax bill worth passing!

  • GOP tax plan does good things on corporate rates, mortgage interest, and estate taxes.
  • This might help the Republicans overcome months of looking wishy washy.
  • But the bill still faces a very uphill battle.
Speaker of the House Paul Ryan (R-WI) talks to reporters following the weekly House Republican Conference meeting at the U.S. Capitol October 24, 2017 in Washington, DC.
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Speaker of the House Paul Ryan (R-WI) talks to reporters following the weekly House Republican Conference meeting at the U.S. Capitol October 24, 2017 in Washington, DC.

Republicans in Congress have finally released their tax reform plan.

We can be excused if this roll out seems a little anticlimactic. After all, we've been hearing about about a dozen key facets of this plan that the GOP has floated and then rescinded for months.

But now that we are unwrapping the box, it turns out there are some new items that were worth waiting for.

First is the call for a 20 percent permanent corporate tax rate. This comes despite reports of some last minute hemming and hawing by some Republicans who were considering a gradual or temporary corporate tax cut.

It was important for the GOP to show some resolve on this issue. The very public A/B testing of so many different corporate and personal tax changes has presented all of us with an ugly picture of an uncertain political party with no strong convictions or clear leadership. Sure, political A/B testing is an effective as a way to find out what the public will like and dislike in regards to all kinds of policies. But the price of doing it too much is that same public loses any handle on what to expect or believe.

But this move to stand clearly behind a considerable cut on corporate rates to that 20 percent from the current 35 percent is a good development.

Second we have perhaps the most controversial proposal: The plan to cap mortgage interest deductions for new home purchases at $500,000, but keep the rules as is for existing mortgages. This starts the long-needed process of eliminating a tax policy that mostly aided the rich and has aided America's ruinous and unsustainable suburban single-family home sprawl.

Consider that almost 90 percent of the Americans who use the mortgage interest deduction, (MID), make $100,000 or more per year. And the value of the deduction rises with the cost of your mortgage, which encourages people to buy more expensive homes and speculate wildly on real estate in general.

"They call this the "death tax" precisely for that morbid reason. And it sure seems like the Democrats want to use death as a way to get the tax money from richer Americans they couldn't get while they were alive with higher income taxes."

And since the plan makes this change for future mortgages only, millions of Americans who are not actually rich but already live in expensive real estate areas would at least not be blindsided by this change.

Other good signs for the middle class include the doubling of the standard deduction. Remember that's essential since about 70 percent of federal tax filers don't itemize their taxes and use that standard deduction according to the Tax Policy Center. And another good move is increasing the child tax credit from $1,000 to $1,600 with an additional $300 credit for each parent as part of a consolidated family tax credit.

And then there's a good shot in the arm the Republicans should get on this argument from an unexpected source. Thursday's Washington Post set its fact checker Glenn Kessler on the case against Democrat Senator Kamala Harris' claim that the GOP tax plan will raise taxes for most working families. Kessler and the Post gave Harris the infamous "Four Pinocchios" for that one.

But Democrats and the left in general will have more to chew on with the plan's call to start phasing out the estate tax, beginning with a doubling of the existing exemption for that tax to almost $10 million and then phasing the estate tax out entirely within six years. Of course, estates worth upwards of $5 million to $10 million and much more are certainly not commonly found among America's middle class.

A serious problem with the estate tax is how it immorally destroys many small businesses. Family farms and even a bagel shop in Manhattan can easily be sitting on assets worth more than the current $5.5 million estate tax exemption. The cash-strapped children of those business owners are forced to sell off those assets and businesses all the time, jeopardizing jobs and devaluing the many years some of those children often put into the building of those businesses.

Democrats have a fair point when they push back on the marketing of estate tax cuts as some kind of big aid to many farmers. It is indeed true that there are still more cash-rich families than farmers or small business owners who would be helped by this estate tax repeal.

And to that I say: "So what?" Maybe this repeal will only help a few hundred small businesses and farms per year. But that's a positive step. Plus, it is simply immoral to tax money again that's already been taxed on many levels for an entire rich person's lifetime simply because that rich person is now dead.

The children of those rich people aren't all just idle heirs. Many of them worked along with their parents to build those assets and/or were deprived of being with them during all those days and long nights when mom and dad were off at work. It's not for the government or almost anyone else to decide whether those heirs have truly earned the estate.

They call this the "death tax" precisely for that morbid reason. And it sure seems like the Democrats want to use death as a way to get the tax money from richer Americans they couldn't get while they were alive with higher income taxes.

But none of these very good ideas in the finally released GOP plan mean the Republican bill has any better chance of actually passing. The GOP Congress has shown precious little ability to stick to its guns in the face of media and other criticism for years now. That's what ultimately doomed the Republican Obamacare repeal and replace efforts, along with an unacceptable amount of lobbyist interference and secrecy by Senate Majority Mitch McConnell. President Trump and others will have to work hard to defend this plan and convince a lot of obviously nervous Republicans in Congress.

The good news is that now that the plan has been released, most of the worst ideas the Republicans were considering at one point or another are gone. That include the wacky border adjustment tax and messing with tax-free contributions to 401(k) plans. If the GOP is going to go down fighting, at least now it will go down fighting for a tax plan that would do more good than bad.

Commentary by Jake Novak, CNBC.com senior columnist. Follow him on Twitter @jakejakeny.

For more insight from CNBC contributors, follow @CNBCopinion on Twitter.