The near-consensus that House and Senate Republicans have reached on repealing ObamaCare taxes could boost their efforts to overhaul the tax code.
The draft healthcare bill Senate Republicans released on Thursday is similar to the House-passed bill on the ObamaCare taxes, repealing nearly all of them and delaying the “Cadillac” tax on high-cost health plans. While senators had considered keeping some of the taxes for longer than the House bill, they mostly stuck with the House plan, making only minor changes to the effective dates.
The Senate bill still faces hurdles to passage. But if it passes, it will remove an issue that otherwise might complicate Republicans’ work on tax reform.
“I think it makes it easier to work through tax reform without these fees and taxes still on the table,” said former Rep. Phil English (R-Pa.), who is now a senior government relations adviser at Arent Fox.
The Congressional Budget Office estimated that the House’s healthcare bill would lower government revenues by nearly $1 trillion over a decade; about $660 billion of that amount would come from repealing and changing ObamaCare tax provisions that are not directly related to health insurance coverage.
Congressional GOP leaders have said they want tax reform to be revenue neutral, which requires finding offsets for tax cuts. By repealing the ObamaCare taxes in a healthcare bill, Republicans would not have to find ways to offset those tax cuts in tax-reform legislation, making the task easier.
Speaker Paul RyanPaul RyanGOP agrees on one thing: ObamaCare taxes must go Ryan reminds lawmakers to be on time for votes Lawmakers consider new security funding in wake of shooting MORE (R-Wis.) and House Ways and Means Committee Chairman Kevin BradyKevin BradyGOP agrees on one thing: ObamaCare taxes must go Overnight Cybersecurity: Trump tweetstorm on Russia probe | White House reportedly pushing to weaken sanctions bill | Podesta to testify before House Intel Senate expected to pass Russia sanctions bill for a second time MORE (R-Texas) have already said that if a healthcare bill isn’t enacted, they will not seek to repeal the ObamaCare taxes in a tax-reform bill.
Still, it’s possible that other Republicans would end up pushing for a tax bill to repeal specific ObamaCare taxes, since many of them are unpopular.
“Some of these taxes have strong constituencies against them who would want to see them repealed no matter what,” said Scott Greenberg, an analyst at the Tax Foundation.
The revenue provisions that pay for ObamaCare include taxes on high-income individuals as well as taxes that fall on various industries in the healthcare sector, such as the medical device and prescription drug industries.
English said that repealing the ObamaCare taxes in a healthcare bill could make it easier for lawmakers to get those health-related industries to help them on tax reform.
“This repeal can also be part of a process of building support for tax reform by essentially addressing a top tax issue in advance” for certain industries, English said.
The House bill repeals most ObamaCare taxes in 2017, while the Senate bill repeals most of the taxes in either 2017 or 2018.
Senators had seriously considered delaying the repeal of some of ObamaCare’s taxes to help pay for their healthcare proposal. But doing so would have cost them much-needed support from outside conservative groups.
Some conservative groups such as FreedomWorks and the Heritage Foundation raised concerns about the Senate bill on Thursday, but even more might have spoken out if more ObamaCare taxes were kept for longer.
“There was such strong unity among conservatives and libertarians that the taxes needed to go,” said Brandon Arnold, executive vice president of the National Taxpayers Union, which is positive about the Senate bill.
Lawmakers still have many challenges to overcome before a healthcare bill is enacted.
Five Republican senators said they do not support the Senate proposal in its current form, and several others have raised concerns. The Senate bill can’t pass if more than two GOP senators vote against it, since all Democrats are expected to vote against it; Republicans have a 52-48 majority.
Even if the Senate is able to pass an ObamaCare repeal measure, it’s unclear if House Republicans would accept it.
Still, some Republicans find it promising that the House and Senate healthcare bills have a number of commonalities, given that some senators had discussed crafting a much more moderate bill.
In addition to repealing most of the ObamaCare taxes, the House and Senate bills both eliminate the individual and employer mandates, cap federal Medicaid spending and allow states to seek waivers for some of the 2010 health law’s requirements.
Americans for Tax Reform President Grover Norquist said that commonalities on healthcare are a positive sign for an agreement on tax reform, since Republicans tend to agree more on taxes than healthcare.
He also said that Republicans might be more comfortable voting for an ObamaCare repeal bill now that Republican Karen Handel won a competitive special election for a House seat in Georgia where healthcare was an issue.
“The House and Senate bills are more alike than I thought they would be,” Norquist said.