The Senate’s second effort to repeal and replace the ACA has failed. Sens. Mike Lee of Utah and Jerry Moran of Kansas both said they could not vote yes on a motion to proceed with the Better Care and Reconciliation Act, leaving the Senate GOP two votes shy of passage. The senators said the BCRA failed to eliminate taxes and failed to lower health care premiums. Will the Senate come together in a bipartisan fashion to improve the Affordable Care Act? Or will the Senate pass a bill to repeal the ACA now and work out replacement later?
Tax cuts: GOP uniter and divider? The Wall Street Journal offers (paywall) two explanations for GOP gridlock. Tax reporter Richard Rubin finds Republicans torn between lawmakers focused on their long-held goal of lowering marginal tax rates and those who want to reform health care and make it affordable for low-income households. Can they do both? Political reporter Gerald Seib approaches the problem in a different way: Stymied by their efforts to rewrite the nation’s health laws, the GOP may turn to more comfortable ground. “Lower [corporate] tax rates [are]… as close to gospel as you can reach in today’s Republican party. Nothing unifies Republicans like cutting taxes.” If only the party had not promised to do both virtually simultaneously.
Alas, it did. GOP Rep. Patrick Duffy of Wisconsin asserted to Fox and Friends, “Tax reform will not happen unless we have healthcare reform done. We're using budget reconciliation, these stupid Senate rules, and in tax reform, it has to be revenue neutral… every tax dollar you move down, another tax dollar has to go up.” Nobody knew math could be so complicated?
Speaking of complicated: The House GOP released its budget plan. The House Budget Committee plans to mark up a 2018 budget resolution tomorrow, and the Republican plan, released today, includes deep spending cuts favored by the House Freedom Caucus. Budget Committee Chair Diane Black hopes for a House vote next week and calls the budget blueprint "not just a vision for our country, but a plan for action." Under it, defense spending would climb over 10 years, while nondefense discretionary spending would fall to $424 billion. That's 23 percent less than the $554 billion spent currently in that category. Medicare and Social Security also face cuts in this proposal, unlike President Trump's budget plan. The House Ways & Means Committee will need to find $52 billion in deficit savings in order to meet Speaker Paul Ryan's and panel chair Kevin Brady's goals of revenue-neutral tax reform. Legislation: Still complicated.
More food for thought in tax reform. In a new TPC brief, Eric Toder considers how to tax the foreign income of US-based multinational corporations. One key question: How should the US treat the $2.6 trillion in those as yet untaxed earnings?
In case you missed it… The Urban Institute and TPC have an updated full report on who gains and loses under the Senate’s Better Care Reconciliation Act. The plan remains very regressive, but less so than in its initial version. This analysis does not include the Senator Ted Cruz’s plan to create a two-tiered insurance market. Researchers will provide that analysis at a later date.
Vic Fleischer leaving the top tax staff post at the Senate Finance Committee. The University of San Diego law professor and expert in taxation of financial institutions is returning to California after just a year as chief tax counsel for panel Democrats. Co-chief tax counsel Tiffany Smith remains on the job.
A tax overhaul in Romania: Indefinitely postponed. As recently as three weeks ago, Romania had plans to replace a flat 16 percent corporate profits tax with a 1 to 3 percent value-added tax. But then the finance ministry completed some preliminary calculations, and the government ditched the plan. “We consider the issue closed,” said Prime Minister Mihai Tudose.
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