Revised Senate Healthcare Bill Retains Obamacare Taxes

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Following the July 4th Congressional recess, Senate Republicans on Thursday released a revised version of the Better Care Reconciliation Act, their plan to replace the Affordable Care Act (ACA). GOP leaders had hoped to debate and vote on a new bill prior to the recess but dropped that plan when it became obvious that it would not garner the necessary 50 Republican votes.

 

Unlike the original draft, the revised version retains two taxes on the wealthy that help pay for the Obamacare law: a 3.8 percent tax on net investment income for individuals earning more than $200,000 and couples earning more than $250,000,and a 0.9 percent surtax for the Medicare insurance program on people at those income levels. Another tax-related provision of the revised bill would return medical expenses, currently only deductible to the extent they exceed 10 percent of income, to the pre-ACA threshold of 7½ percent.

 

Leaving the ACA taxes in place may placate the concerns of some moderate Republicans, but is likely to garner criticism from more conservative ones. A new CBO score on the bill is expected Monday or Tuesday, and Senate Majority Leader Mitch McConnell (R-KY) promised "We will be voting next week." The new Senate bill differs significantly from the healthcare bill passed by the House in May. If it passes the full Senate, the bill would then need to be approved by a majority of representative in the House, where the conservative Freedom Caucus holds considerable sway.

 

Yesterday, the House Ways and Means Tax Policy Subcommittee held a hearing to examine how tax reform will create new jobs and help small business growth. Three small business owners testified, advocating a reduction in tax rates and the repeal of the estate tax. A witness from the Center on Budget and Policy Priorities disagreed, saying the changes proposed in the House "Blueprint" plan would benefit the wealthy more than small businesses, and would encourage tax avoidance.  The subcommittee has scheduled another tax reform hearing for July 19th.

 

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