A proposal to remove a $172 billion tax cut in the Senate Republican Obamacare-repeal bill is picking up steam, with some GOP members appearing willing to give up the provision in order to advance the faltering legislation.
Several Republicans said Thursday that they’re open to scrapping a repeal of the Affordable Care Act’s 3.8 percent tax on investment income, which largely targets the wealthy, in order to provide more subsidies for low-income Americans who buy into the ACA’s insurance exchanges.
Scrapping the tax repeal could provide an avenue to attract more moderates to the health care repeal bill, such as Sens. Susan Collins of Maine and Dean Heller of Nevada. Some moderate Senate Republicans have opposed the bill’s steep cuts to Medicaid and provisions that would throw off as many as 22 million individuals from insurance rolls. That may help get Republicans to the 51 votes needed to pass the repeal bill using reconciliation, a parliamentary move meant to avoid a filibuster from Democrats, who are lined up en masse against the bill.
Sen. John Thune, a member of the Republican leadership who sits on the Senate Finance Committee, told reporters Thursday that he’s open to the idea of eliminating the tax cut if it means advancing the repeal bill.
“If it takes something like that to get our members on board to move this process forward, I think we have to consider that,” Thune said.
Sen. Mike Rounds, who has questioned the repeal bill’s investment-tax cut, said that while the Senate bill is better than the current Obamacare system, some changes could be made to make it palatable to more senators.
“We’re just trying to get to 50 votes, and when you try to get to 50 votes you try to do what you can to handle the other folks’ concerns about the changes that are there,” Rounds said.
Rounds said Republicans have had “broad discussions” on the investment tax, and it’s one of several options being explored to attract more members to the bill. Still, Rounds said Senate Majority Leader Mitch McConnell has made no guarantees about scrapping the tax repeal.
The current version of the Senate bill would eliminate a 3.8 percent tax on net investment income, which is income received from assets such as stocks and bonds, for individuals earning more than $200,000 per year or $250,000 for married couples filing jointly. The tax, which went into effect in January 2013, also covers estates and trusts and is applied on top of capital-gains taxes.
The Congressional Budget Office’s score of the health care bill said eliminating the tax would cost the federal government $172 billion over 10 years.
Conservatives have pushed hard to eliminate the taxes created as part of Obamacare, and Senate Finance Committee Chairman Orrin Hatch has been vocal on that issue. But when asked whether he thought Republicans would scrap the tax cut, Hatch told reporters, “We’ll see what happens.”
McConnell was forced to delay a procedural vote on the health care bill Tuesday after several GOP senators said they would not vote for the measure in its current form. The move comes as public support for the bill remains low. An NPR/PBS Newshour/Marist poll released June 28 showed support for the bill at only 17 percent, with 55 percent disapproving.
Senate Democrats have hammered their GOP colleagues over the bill’s provisions cutting insurance rolls, but also over what they say are tax breaks for America’s wealthiest citizens.
“We’re talking about average American working people, they’re talking about multibillionaires,” Senate Minority Leader Chuck Schumer said at a June 27 press conference. “That’s why they’re in such trouble, because their bill is aimed at helping the very wealthy, whereas we are trying to help American families.”
If passed in the Senate, the bill must still go to the House, which passed its own version in May with more cuts to Obamacare programs. Key House Republicans were split on the investment-tax issue.
House Speaker Paul Ryan declined to weigh in on the Senate deal-making during a Thursday press conference.
Although House conservatives have made repealing Obamacare’s taxes a centerpiece of their policy demands, House Freedom Caucus Chairman Mark Meadows indicated Thursday that he could approve of the Senate bill even if it did not include a repeal of those taxes, because some of those issues could be addressed later this year.
“Our position has always been that we need to make sure that we repeal all the taxes,” Meadows said. “That’s our official position. However, to look at this myopically and in a vacuum would not be accurate. We’ve got tax reform coming on the back side of this, so all it’s doing is changing the baseline that you could potentially change in 10 months or 10 weeks if you’ve got the political will to do so.”
Complicating matters is the fact that using the health bill to repeal the Obamacare taxes will make it easier for Republicans to craft tax reform later on, by changing the baseline amount of federal revenue that would be used to calculate a reform package’s effects on the deficit. Keeping the Obamacare taxes in place now could mean a smaller tax-reform effort later this year.
House Ways and Means Chairman Kevin Brady, whose committee is responsible for writing tax-reform legislation, said Thursday he hopes all the Obamacare tax cuts remain in the bill if it heads to his chamber.
“I’m looking forward to the Senate removing all of those taxes from our economy,” Brady said.
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