Congressional Republicans have struck a deal on tax reform, enabling them to pass a final bill shortly after the House and Senate each passed its own proposal.

The combined proposal would slash corporate tax rates permanently, offer temporary cuts for individuals, and repeal the individual mandate in Obamacare, a $338 billion health care cut that leaves 13 million more people uninsured by 2027. The result is that by that year, when the individual cuts expire, most Americans will be worse off due to higher taxes and lower health care coverage, while rich people who own shares in corporations will continue to benefit.

Overall, it bears a closer similarity to the Senate bill than the House one. But there are important differences that set it apart from both previous proposals.

It sets a top individual income tax rate of 37 percent, below 38.5 percent in the Senate bill and 39.6 percent in the House bill (which is also the rate under current law). It finances that with a slightly higher corporate tax rate of 21 percent. It retains a more generous deduction for state and local taxes, and limits the mortgage interest deduction slightly for wealthy homeowners. The bill also eliminates the corporate alternative minimum tax, which added to the Senate bill and would’ve amounted to a $250 billion corporate tax hike.

And Republicans are on track to pass the bill into law the week of December 18 — well before Democratic Senator-elect Doug Jones is sworn into office, weakening the party’s Senate majority.

Who gets tax cuts, and tax hikes, under the bill

Before delving into the bill’s details, it’s worth taking a moment to consider who, all told, comes out ahead and behind.

As of this writing, we do not have an official analysis from Congress’s Joint Committee on Taxation. But the nonpartisan Tax Policy Center has run the numbers on the compromise bill. Note that the TPC analysis ignores the changes to the top individual rate, expansion of the state and local tax deduction, slightly higher corporate rate, and mild limits on the mortgage interest deduction included in the most recent House-Senate deal. It also excludes the effect of eliminating the individual mandate, which effectively reduces the amount of Medicaid and insurance subsidy money going to poor and middle-income people, and increases premiums on many upper-middle-class people too. On net, the poor would actually lose out in all years once this effect is taken into account.

With that in mind, here’s the big picture:

The story is very different in 2018 and 2025 compared to 2027, because at the end of 2025, all cuts for individuals expire. However, a significant tax increase — the use of a slower-growing inflation index, chained CPI, to adjust tax brackets — remains, as do corporate tax cuts. That means that rich and very rich people who own many shares of stock gain tremendously still, but middle- and upper-middle-class individuals who had been benefiting from individual rate cuts lose out.

You can see the effects of the bill in more granular detail in the following table. TPC finds that the top 1 percent of taxpayers earn 82.8 percent of the benefits from the cuts by 2027, and the top 0.1 percent earn 59.8 percent of the benefits:

But these averages obscure important differences within income groups. Some people earning $200,000 a year will pay less in taxes in 2027. But others will pay more, which can be obscured by a finding that, say, the 80-90th percentiles as a whole will get a $100 tax cut on average.

TPC modeled out for 2018, 2025, and 2027 what share of each group will see taxes go up and down. Here’s 2027:

Overall, 53.4 percent of taxpayers see their taxes go up, with an average hike of $180; but 25.2 percent see their taxes go down, by $1,540 on average.

These percentages vary widely between income groups. Within the middle quintile, people earning $54,700 to $93,200 a year, 69.7 percent would see their taxes go up. But only about 8 percent of the very richest one-thousandth of Americans would see a tax hike.

Note, again, that this doesn’t take into account the effect of cutting health care.

Republicans argue that 2018 is a better year to look at than 2027, as they argue that, despite writing the bill so that individual cuts expire, they hope to make them permanent in the future. While it’s somewhat disingenuous to demand that your bill be evaluated not as it’s written, but as it might be amended at some later date, here in the interest of fairness is TPC’s 2018 projection:

In this scenario, 80.4 percent of Americans get a tax cut, and the average American household in the middle quintile would get a $930 cut. But 4.8 percent of Americans would see taxes go up, with hikes concentrated in the upper middle class and among the very rich. Only 20.5 percent of the benefit would be concentrated in the top 1 percent (far lower than in 2027), but 65.3 percent goes to the richest fifth of Americans.

The bill would good for corporations and the wealthy

Before delving into the bill’s details, it’s worth taking a moment to consider who, all told, comes out ahead and behind. Here’s who would be better off:

Corporations , broadly, are the focus of most of the tax cuts. According to the Joint Committee on Taxation’s analysis of the bill, cutting the corporate tax rate from 35 percent to 20 percent starting in 2019 costs more than $1.33 trillion over 10 years. The new compromise version increases the rate somewhat to 21 percent, but the cost remains similar, especially because under the new bill the cut begins in 2018, not 2019. Corporations also in many cases gain new, more favorable treatment of income earned abroad, which is either not taxed or taxed at an even lower rate than 21 percent.

, broadly, are the focus of most of the tax cuts. According to the Joint Committee on Taxation’s analysis of the bill, cutting the corporate tax rate from 35 percent to 20 percent starting in 2019 costs more than $1.33 trillion over 10 years. The new compromise version increases the rate somewhat to 21 percent, but the cost remains similar, especially because under the new bill the cut begins in 2018, not 2019. Corporations also in many cases gain new, more favorable treatment of income earned abroad, which is either not taxed or taxed at an even lower rate than 21 percent. Wealthy, particularly ultrawealthy, people tend to earn a disproportionate share of their income from capital (like stock sales and dividends) and thus benefit from cuts to the corporate tax, which is largely a tax on capital. You see this in the TPC analysis above. If the corporate tax also reduces wages, as some conservative economists allege, then corporate cuts still disproportionately help the wealthy, as a huge share of wages go to high earners, not low- or median-wage workers. Additionally, the pass-through tax cut could enable some wealthy people who either own pass-throughs or create new ones to shelter some of their income from high rates.

tend to earn a disproportionate share of their income from capital (like stock sales and dividends) and thus benefit from cuts to the corporate tax, which is largely a tax on capital. You see this in the TPC analysis above. If the corporate tax also reduces wages, as some conservative economists allege, then corporate cuts still disproportionately help the wealthy, as a huge share of wages go to high earners, not low- or median-wage workers. Additionally, the pass-through tax cut could enable some wealthy people who either own pass-throughs or create new ones to shelter some of their income from high rates. People making mid- to high six-figure incomes , who arguably should count as wealthy or rich too. Their top income tax rate is reduced from 39.6 percent to 35 percent, and they additionally benefit from other individual rate reductions for lower tax brackets. While many face lower tax deductions due to changes in how state and local taxes are treated, they will probably come out ahead overall.

, who arguably should count as wealthy or rich too. Their top income tax rate is reduced from 39.6 percent to 35 percent, and they additionally benefit from other individual rate reductions for lower tax brackets. While many face lower tax deductions due to changes in how state and local taxes are treated, they will probably come out ahead overall. Pass-through companies , like the Trump Organization, which get a new deduction reducing their tax burden. The House-Senate compromise bill allows people with pass-through income to deduct a portion of that income from their taxes; the deduction is for 20 percent of pass-through income, less than the 23 percent under the Senate-passed bill.

, like the Trump Organization, which get a new deduction reducing their tax burden. The House-Senate compromise bill allows people with pass-through income to deduct a portion of that income from their taxes; the deduction is for 20 percent of pass-through income, less than the 23 percent under the Senate-passed bill. Heirs and heiresses, as the estate tax’s exemption is doubled from $5.5 million to $11 million, meaning an even smaller share of the ultrarich will pay the tax — and even those who do pay will pay substantially less than under current law.

But the bill would hurt the poor and increase the deficit

The GOP’s tax reform proposal would leave other groups worse off:

Poor families were rumored to be getting a tax cut due to a change in the refundability formula for the child tax credit — but that didn’t make it into either the House or Senate bill. The credit only goes to families with $3,000 in earnings or more, and phases in slowly; some in Congress were pushing to lower the threshold to $0, but the Senate bill instead lowered it to $2,500, a pretty mild change. Marco Rubio got an extremely minor further expansion of the credit included in the compromise bill, which doesn’t change the situation for very poor people.

were rumored to be getting a tax cut due to a change in the refundability formula for the child tax credit — but that didn’t make it into either the House or Senate bill. The credit only goes to families with $3,000 in earnings or more, and phases in slowly; some in Congress were pushing to lower the threshold to $0, but the Senate bill instead lowered it to $2,500, a pretty mild change. Marco Rubio got an extremely minor further expansion of the credit included in the compromise bill, which doesn’t change the situation for very poor people. Medicaid and insurance subsidy beneficiaries, a group of poor and middle-class people who’d lose benefits without the individual mandate pushing them into insurance. Upper-middle-class people still buying individual insurance would pay higher premiums.

beneficiaries, a group of poor and middle-class people who’d lose benefits without the individual mandate pushing them into insurance. Upper-middle-class people still buying individual insurance would pay higher premiums. Rich blue-state residents would pay higher taxes , as deductions for state and local taxes are capped at $10,000. That said, wealthy people benefiting from these deductions will likely see this tax hike offset by the other tax cuts in the package.

, as deductions for state and local taxes are capped at $10,000. That said, wealthy people benefiting from these deductions will likely see this tax hike offset by the other tax cuts in the package. And it would increase the deficit; the Joint Committee on Taxation scored the Senate-passed bill as costing $1.45 trillion over 10 years, and the cost of the House-Senate compromise bill is likely similar.

Individual income tax rates are adjusted

The seven current individual income tax brackets are changed. In 2017, for a married couple the brackets are: 10 percent (taxable income up to $18,650); 15% ($18,650 to $75,900); 25% ($75,900 to $153,100); 28% ($153,100 to $233,350); 33% ($233,350 to $416,700); 35% ($416,700 to $470,700); 39.6% (taxable income over $470,700)

Under the new plan they’d be: 10% (taxable income up to $19,050); 12% ($19,050 to $77,400); 22% ($77,400 to $165,000); 24% ($165,000 to $315,000); 32% ($315,000 to $400,000); 35% ($400,000 to $600,000); 37% (taxable income over $600,000)

The top rate is cut and the threshold is raised. Most middle-class taxpayers would be in a 12 percent bracket, not 15 percent, and many affluent, upper-middle-class households would be knocked from a 25 percent bracket to 22 percent, or from 33 percent to 24 percent, or from 39.6 percent to 35 percent.

The thresholds for brackets will be adjusted according to chained CPI, a slower-growing measure of inflation than normal CPI, which is used currently; this change raises revenue over time by gradually pushing more and more people into higher tax brackets.

The standard deduction is increased, personal exemptions are eliminated, and the child tax credit is mildly boosted

Standard benefits for families are changed significantly, with an eye toward simplifying the vast array of benefits (standard deductions, personal exemptions, child credits, etc.) currently available:

The standard deduction will be raised to $24,000 for couples and $12,000 for individuals, a near doubling from current levels.

The child tax credit will grow from $1,000 to $2,000; only the first 1,400 will be refundable, and access for poor families is not significantly expanded.

The child credit would be available for many more wealthy households: It would start to phase out at $400,000 in earnings for married couples, as opposed to $110,000 under current law.

The personal exemption (currently offering households $4,050 per person in deductions) is eliminated, replaced in theory by the higher child credit, lower rates, and higher standard deduction.

Some deductions are limited, but most remain intact

The mortgage interest deduction is limited to the first $750,000 of a mortgage’s value. This is a compromise between current law (where the limit is $1 million) and the House bill (which lowered that to $500,000).

The deductions for state and local income/sales taxes, and state and local property taxes, are limited to $10,000 total.

Most major tax breaks for individuals — the charitable deduction, retirement incentives like 401(k) and IRA provisions, the tax exclusion for employer-provided health care, the earned income tax credit, and the child and dependent care tax credit — would not be cut.

Major tax breaks that the House bill would’ve eliminated, including the exclusion of tuition waivers for graduate students, the deduction for student loan payments, the medical expense deduction, and the adoption tax credit, are preserved.

Corporate taxes are slashed dramatically

The corporate income tax rate will be lowered from 35 percent to 21 percent.

The corporate tax will be “territorial”: Foreign income by US companies will be, in general, tax-free.

All untaxed income currently held overseas will immediately be taxed at a fixed rate, much lower than the current rate, effectively rewarding companies that kept money overseas.

Despite the tax being “territorial” in principle, there will be a “minimum tax” imposed on profits that foreign subsidiaries of US companies earn from intangible assets like patents and copyrights, to prevent companies from moving those assets abroad to avoid taxes, which is a very easy tax evasion move under current law. There’s also a tax on money shifted to overseas subsidiaries.

Instead of having companies “depreciate” investments by deducting them over several years, companies could immediately expense all their investments. This benefit expires after five years, presumably to save money, which dampens any positive effect it has on economic growth.

Companies paying the corporate income tax would face a limit on how much debt they can deduct from their taxable income, a significant change for highly leveraged companies like banks.

Two big existing credits for corporations — the research and development tax credit and the low-income housing credit — won’t be repealed. But a deduction for domestic manufacturing is gone.

Pass-throughs like the Trump Organization win big

“Pass-through” companies like LLCs, partnerships, sole proprietorships, and S corporations, which are overwhelmingly owned by rich individuals like Donald Trump and currently pay normal income tax rates after their earnings are returned to the companies’ owners, would get a number of tax cuts too:

Most taxpayers with pass-through income would be able to deduct 20 percent of that income, effectively lowering the top rate they pay.

To limit the deduction, wealthy people with “service industry” income (think accountants or lawyers) would see the deduction limited.

The deduction creates a huge loophole for rich people, who could incorporate as sole proprietorships and “contract” with their employers so their income is counted as pass-through income rather than wages.

Additionally, the exemption for the estate and gift tax, the most progressive component of the federal tax code, only paid by extremely rich estates, is doubled. The alternative minimum tax for individuals, which limits tax breaks for wealthy taxpayers, is retained in more limited form. And a brand new 1.4 percent tax on university endowment income is added.

The case for the bill

For the public at large, the case for a massive corporate tax cut is sort of hard to grasp. Seventy-three percent of Americans, and 53 percent of Republicans, say they want corporate taxes either kept the same or raised, according to Pew Research Center polling. That the cuts are paired with some tax increases on individuals, like the elimination of the deduction for state and local income taxes and the Social Security number requirement, which kicks some 3 million kids off the child tax credit, makes the choice even more confounding.

But the GOP has a specific economic theory that it claims supports the bill and makes the changes it envisions worthwhile.

The basic idea is that while most economists believe corporate taxes are primarily paid by owners of capital (that is, people who own stock in corporations) in the form of lower profits, a sizable minority, including White House chief economist Kevin Hassett, think that a lower tax rate would spark so much additional investment in the United States that it would bid up wages and leave the middle class better off through its indirect effects.

Other, smaller provisions of the reform package also have reasonable cases for them. Opponents of the state and local tax deduction, which the bill would sharply limit, argue it’s regressive and concentrates benefits on rich states rather than poor ones that actually need the money. The current mix of standard deductions, personal exemptions, and child credit is needlessly duplicative, and the bill simplifies it a bit, while creating new winners and losers.

Others are a bit harder to defend. Many economists oppose wealth taxes like the estate tax on the grounds that they penalize savings, but intergenerational transmission of wealth also has huge negative externalities (heirs less willing to work, less equal politics, etc.) that cutting the estate tax dramatically would worsen.

Cutting taxes on pass-through income is particularly hard to defend. Pass-throughs already get a sizable tax advantage relative to other companies. While corporate profits are taxed in two stages — first by the corporate income tax, and then through dividend or capital gains taxes — pass-through income is only taxed once, at the individual level. This change would worsen that advantage.

Pass-throughs will counter that in many cases, people who own stock through 401(k)s and IRAs don’t have to pay capital gains or dividend taxes, and so their profits are only taxed at the corporate rate, which is lower than the top individual rate (and would be much lower under this plan), putting pass-throughs at a potential disadvantage. But analysts who’ve looked at this comparison generally conclude that pass-throughs are taxed less overall, and certainly don’t need another break.