Senate Defeats ACA Replacement Bills; Tax Outlook Uncertain

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The Senate narrowly voted early this week to pass a procedural motion to bring bills designed to repeal and/or replace the Affordable Care Act (ACA) to the floor for debate and vote.  Two Republican Senators voted against the motion and the deciding vote was cast by Vice President Pence.


Since that time the Senate has debated and voted on a number of alternative measures.  The first several of these were defeated, and the Senate has continued to introduce, debate, and vote on additional bills.  Some measures, such as the straight ACA repeal (without replacement) voted down on Wednesday, would have abolished all ACA-related taxes including the 3.8% Net Investment Income Tax and 0.9% Additional Medicare Tax that the ACA imposes on higher-income taxpayers.  Others, such as a new draft of the Better Care Reconciliation Act of 2017 (also defeated), would have kept some or all of these taxes in place.  It was not known at press time what (if any) bill may actually pass the Senate this week or what its tax implications would be.  Any bill that does pass will have to go back to the House of Representatives to be reconciled with the bill that the House passed on May 5th.


Meanwhile, the Senate Finance Committee advanced President Trump's nominee to fill the top tax policy role at Treasury, the position of assistant secretary for tax policy. If approved by the full Senate, David J. Kautter will be a key figure in tax reform. The approval was unanimous, with both Democrats and Republicans praising the candidate.


Kautter is currently the partner-in-charge at the tax and consulting services firm RSM US LLP. His experience includes over 30 years at Ernst & Young LLP, including 13 years as its director of national tax.  In a 2014 congressional committee appearance, he advocated a single tax rate schedule for all business income, regardless of the type of legal entity earning the income. "The country," he testified, "would be better served if corporate tax reform is approached as business tax reform."


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