(Corrects to say Thursday, not Wednesday, in first paragraph)
WASHINGTON, Nov 2 (Reuters) - President Donald Trump's drive to overhaul the U.S. tax system will reach a major milestone on Thursday, when Republicans in the House of Representatives unveil their long-awaited initial bill.
The expected bill will be the starting gun for a frantic race toward what Trump and House and Senate Republicans hope will be their first major legislative victory: the enactment this year of a tax package seeking up to $6 trillion in tax cuts over the next decade for corporations, small businesses and individuals.
Congress has not succeeded on comprehensive tax reform since 1986, when Ronald Reagan was in the White House and Democrats controlled the House.
Trump said at the White House this week that he wants Congress to pass tax bills by the U.S. Thanksgiving holiday on Nov. 23.
House Ways and Means Committee Chairman Kevin Brady has promised to release a full bill on Thursday. But important issues remain unresolved and Brady himself predicts the initial legislation will change next week, when his panel is due to begin preparing it for an eventual House vote.
As Brady's panel met late into the evening on Wednesday, going over the final details of the tax package, questions remained about how to best handle mortgage interest and 401(k) retirement plans, a federal deduction for state and local taxes, and the tax plan's projected impact on the federal deficit.
"We're going to make improvements at every step," Brady said as he left the meeting.
A compromise that could remove one of the plan's biggest obstacles the proposed elimination of a deduction for state and local tax (SALT) payments is expected to be in the bill. The compromise would preserve the deduction for property tax, but not income tax payments.
Lawmakers from high-tax states such as New Jersey, New York and California, where upper middle-class voters would be hardest hit by the SALT deduction, have expressed varying degrees of confidence about the compromise.
Representative Tom MacArthur of New Jersey said that his staff is calculating home prices in his district to determine where the property-tax cap should fall. "I think it needs to go up," he told Reuters.
Representative Lee Zeldin of New York, who favors keeping the full SALT deduction, said on Wednesday there still needs to be "major changes made to the proposals on state and local taxes."
The House bill will also cut the top corporate income tax rate to 20 percent from 35 percent, likely in several steps, Brady said.
It is also expected to phase out the estate tax paid by the wealthiest tax payers; keep a top individual tax rate of 39.6 percent; set a repatriation rate for U.S. businesses with profits overseas; and establish a new rate for "pass-through" businesses, according to sources familiar with negotiations. (Reporting by Amanda Becker and David Morgan; Editing by Sam Holmes, Larry King)