Health Care Reform Dropped; Congress Turns to Tax Reform

House Republican leadership abruptly pulled the health care bill and will now turn to tax reform.  Not repealing the Affordable Care Act creates a major problem for tax reform efforts, because Republicans no longer have the billions in savings from stripping the Affordable Care Act’s taxes and subsidies. Lawmakers will have less flexibility to overhaul the tax code without adding to the deficit.  One Republican, Rep. John Shimkus (R-Ill.), stated that the top corporate tax rate will have to be 30%, 10 percentage points higher than what Republicans proposed in 2016.

The outcome of the health care reform vote was unclear in the hours leading up to the scheduled vote, with leadership making last-minute compromises to convince ultra-conservative members of the Freedom Caucus and certain moderates to join the fray. Those changes included keeping the 0.9 percent Medicare surtax on high-income earners until 2022, a move that would have helped counter the argument that the bill is a tax cut for the rich and a premium hike for the poor.

The next few months should prove more interesting than the last three.  Stay tuned!

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