Is the Affordable Care Act safe from SCOTUS repeal? Perhaps. In oral arguments yesterday, Chief Justice John Roberts and Justice Brett Kavanaugh seemed to reject the arguments of the Texas Solicitor General. Texas and other GOP states argued that because Congress zeroed out the Affordable Care Act’s tax penalty for not buying insurance, it had eliminated the tax-based individual mandate. Without the tax, the plaintiffs said, the entire ACA should be struck down. But Roberts and Kavanaugh said if Congress wanted to repeal the law, it could have. Kavanaugh added the “proper remedy would be to sever the mandate and leave the rest of the act in place.” By overturning the ACA, the Court would effectively repeal several ACA taxes on high-income households, including the Net Investment Income Tax.
President-elect Biden names his Treasury transition leaders. They include Lily Batchelder, a former top Senate Finance Committee staffer now at NYU law school, Simon Johnson of MIT, and Betsey Stevenson of the University of Michigan, a former economic adviser to President Obama.
In other post-election news. President Trump reportedly wants his agencies and the OMB to continue to produce a budget for fiscal year 2022, which won’t begin until October, 2021. That’s long after Trump leaves office on Jan. 20. Despite Trump’s highly unusual move, Biden is likely to present his own budget soon after his swearing in.
Treasury may let some pass-through businesses avoid the SALT cap. Treasury announced it is considering guidance that would allow pass-through businesses to avoid the federal $10,000 cap on state and local tax (SALT) deductions. Owners of S corporations and other pass-throughs could dodge the cap by paying those taxes through the business entity, a step permitted by states like New Jersey. University of Chicago law professor Daniel Hemel told The Wall Street Journal (paywall), “This makes it very easy for states to effectively exempt everyone except W-2 wage-earners from the $10,000 SALT cap.”
Tune in tomorrow at noon for The Prescription. TPC’s Howard Gleckman and TPC Director Mark Mazur will discuss what the 2020 elections mean for tax policy for the rest of 2020 and into 2021. Watch here live.
McConnell doubles down on a down-sized coronavirus relief bill. Senate Majority Leader Mitch McConnell asserted yesterday that he didn’t “think the current situation demands a multi-trillion dollar package. So I think it should be highly targeted, very similar to what I put on the floor both in October and September,” or about $500 billion. House Speaker Nancy Pelosi still wants a package that approaches $2 trillion.
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