Senate Poised to Pass Massive Tax Reform Measure
After a series of fast-paced negotiations this week, U.S. Senate Republicans are poised to pass their sprawling $1.4 trillion tax reform measure with a vote expected yet this evening.
On Tuesday, the Senate Budget Committee advanced the tax measure on a 12-11 partisan vote, clearing the way for a full Senate vote on the floor. What followed the committee vote was a flurry of last-minute deal-making and closed door meetings, as Senate GOP leaders attempted to lure undecided Republican Senators such as Susan Collins (R-Maine) and Bob Corker (R-Tennessee).
Several Republican Senators remained on the fence as of yesterday, particularly after the Joint Committee on Taxation (JCT) released its analysis on the latest tax reform proposal on Thursday. The JCT estimated that reform measure will add $1.4 trillion to the federal deficit and that the economic stimulus created by the bill would only provide $400 billion to offset the deficit created by the bill.
As a result of ongoing and last-minute negotiations, at the time of this update, no final legislative text or details of the tax reform bill were available. However, reports indicate Senate Republicans still plan to permanently cut the corporate tax rate to 20 percent and temporarily reduce tax rates for individuals.
The Senate measure is also expected to repeal the Affordable Care Act’s (ACA) individual insurance coverage mandate tax penalty. As we previously reported, the Congressional Budget Office (CBO) estimates that, by eliminating the individual mandate, the number of uninsured Americans will increase by 13 million over the next decade. Average health insurance premiums are expected to increase by 10 percent, as well with the elimination of the individual mandate.
Recall, the U.S. House of Representatives passed their own version of tax reform—the Tax Cuts and Jobs Act—which would reduce the corporate tax rate, reduce the number of individual tax brackets, and eliminate deductions and credits available to individuals.
The tax reform proposals continue to threaten existing vital programs, including the Prevention and Public Health Fund (PPHF). With the enactment of either of the proposed measures (House or Senate), the federal deficit is expected to increase in upwards of $1.5 trillion over the next decade. If Congress does not enact offsetting budgetary savings, the Statutory Pay-As-You-Go Act of 2010 (SPAYGO) will be triggered, resulting in massive, automatic program funding cuts every year for the next ten years. Potential SPAYGO impacts include:
- Four percent reduction in Medicare payments;
- Elimination of funding for the Prevention and Public Health Fund (PPHF); and
- Elimination of other program funding for items such as Social Services Block Grants and the Crime Victims Fund.
The tax measure is poised to have expansive and substantial impacts on a wide range of areas, including public health, safety net programs, and higher education. Reports have also suggested that California will be one of the states that will be most significantly impacted by the tax reform measure.
With a vote on the Senate measure likely to be held later this evening, it unclear what the final vote will be and, if passed, how Congress will reconcile the House and Senate versions. The House and Senate may enter into conference to reconcile their two measures or the House may simply take up the Senate measure for a vote.
To complicate matters, funding for the federal government is set to expire next Friday, December 8. Congress must pass a continuing resolution (CR) to fund the federal government and avoid a shut down.
With only a handful of days remaining in this year’s Congressional session, several outstanding priorities, including the continuing resolution, CHIP reauthorization, and community health center funding, remain.