In what is emerging as the latest potential stumbling block for the passage of GOP tax reform, on Tuesday afternoon Senate Majority leader announced that the Senate tax bill will include language to repeal ObamaCare’s individual mandate, a move which could make passage prolematic as it could withdraw support from moderate Republicans. According to The Hill, Conservatives led by GOP Sens. Ted Cruz, Rand Paul and Tom Cotton pushed hard to include the provision, which would eliminate the federal penalty on people who do not buy health insurance.
The move, if passed, would free up an estimated $300 billion to $400 billion over the next year that could be used to pay for lowering individual and business tax rates even further.
According to McConnell, adding the individual mandate repeal would make it easier to muster 50 votes to pass the bill, although many others disagree. “We’re optimistic that inserting the individual mandate repeal would be helpful and that’s obviously the view of the Senate Finance Committee Republicans as well,” McConnell said.
Allaying concerns that the revision would lead to a dealbreaker, Senator John Thune, the Senate’s No. 3 Republican, told reporters there has been a whip count and he is confident Republicans can pass a tax bill that includes a measure to repeal the mandate.
Thune said the Alexander-Murray bill, aimed at stabilizing markets, would be brought up separately. That bill funds key payments to insurers for two years in exchange for more flexibility for states to change ObamaCare rules.
“I’m pleased the Senate Finance Committee has accepted my proposal to repeal the Obamacare individual mandate in the tax legislation,” Cotton said in a statement. “Repealing the mandate pays for more tax cuts for working families and protects them from being fined by the IRS for not being able to afford insurance that Obamacare made unaffordable in the first place. I urge the House to include the mandate repeal in their tax legislation.”
Republican members of the Senate Finance Committee had met Monday night to discuss the repeal issue, Republican aides told The Hill. The full Senate GOP caucus discussed the idea at its lunch meeting on Tuesday.
Sen. John Kennedy (R-La.) said the bulk of the GOP’s policy luncheon Tuesday was focused on repealing the individual mandate through tax reform. While he admitted that the decision wasn’t unanimous, he said that no one threatened to vote against tax reform if it were included.
“This is totally different from health care. Nobody was standing up saying ‘if you do this, I’m not going to vote for the bill.’ There’s none of that. Everybody wants to get to yes,” he said. Still, it’s a risky gambit if it alienates more than just 3 moderate republicans as it would make the bill’s passage impossible.
Kennedy said the savings could “give relief to those middle and upper middle tax payers who are not getting as much relief as they should” because of the bill’s elimination of state and local tax deductions.
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Meanwhile, in a note released earlier Tuesday, Goldman’s economist team said that tax reform debate is moving forward faster than Goldman, or most other observers expected, and as a result the bank boosted its odds that tax reform will be enacted by early 2018 to 80% from 65%. Even so Goldman said it still sees challenges that may slow or stop bill, including push-back from affected industries, narrow vote margin in the Senate, keeping cost under $1.5trillion limit, although it said that recent positive developments appear to outweigh those risks. It was not clear how Goldman feels about including Individual mandate repeal as part of the Senate bill.