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House Republicans Assessing Path Toward Tax Reform

Posted on April 5, 2017 by Dylan F. Moroses

Three House Republicans speculated March 29 whether eliminating Affordable Care Act taxes would help them craft the House GOP tax reform blueprint into legislation, but the timing for legislative efforts remained unclear as the Senate Finance Committee chair said he may look to address healthcare taxes during tax reform discussions.

House Ways and Means Committee member Kenny Marchant, R-Texas, told reporters that the tax panel would be developing tax reform legislation, although he suggested that leadership could have other plans.

Asked whether Republicans plan to still push healthcare reform legislation first, before tax reform, Marchant said, "That may be the speaker's plan, but our plan is to move full speed ahead on tax reform, and it's interrupted by [Ways and Means Chair Kevin Brady, R-Texas] having to backtrack and work on healthcare. . . . We're assuming we're moving ahead on tax reform."

House leadership and President Trump announced March 24 that Republicans would be moving on from a failed attempt to pass the American Health Care Act, legislation that would have eliminated nearly $1 trillion in taxes from the ACA while implementing some GOP-centric healthcare reforms, including expansions to health savings accounts and a new refundable, advanceable tax credit.

However, House Speaker Paul D. Ryan, R-Wis., told reporters during a March 28 press briefing that Republicans plan to revisit the healthcare issue but will not develop a time frame for when to address it. Marchant previously said that Republicans "really need that money" from eliminating the ACA taxes and thereby reducing the budget baseline to make tax reform easier. 

Ways and Means member Mike Bishop, R-Mich., told Tax Analysts that if that ACA revenue is not available, there are other alternatives to pay for tax reform, like budget savings. "If that's not available, we go to something else, and there's plenty of 'something else' around here in government."

Brady told Tax Analysts that the ACA taxes would remain law and that they would not be included in any tax reform discussion revolving around the "Better Way" blueprint. "We've made clear: the Obamacare taxes stay with Obamacare repeal and replace. We didn't contemplate that being imported in the blueprint, and we still don't."

However, in the Senate, Finance Committee Chair Orrin G. Hatch, R-Utah, told reporters he would perhaps look at repealing some of the ACA taxes like the medical device excise tax or the excise tax on high-cost health insurance plans known as the Cadillac tax during tax reform discussions, two provisions he called "abysmal."

Asked if that revenue should be addressed in either healthcare or tax reform legislation, Hatch said, "Either, as far as I'm concerned. Any way we get rid of those I think would be a good thing."

Marchant said he expects the work on tax reform to be done without an "artificial deadline" that some believe contributed to the healthcare reform failure, but he expects the effort to be shaped through two hypothetical lenses: one in which the committee has the nearly $1 trillion in savings from repealing the ACA taxes, and another in which that revenue remains in place.

"It doesn't change much, because from the beginning, we're still going to have to send the bill to the Senate. We don't have any idea what the Senate bill is going to say, so we may have to readapt it at that point," Marchant said.

Stephen K. Cooper and David van den Berg contributed to this article.

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