Tags: Healthcare Reform | taxes | GOP | healthcare plan | signal | far-reaching | shift

Taxes on GOP Healthcare Plan Could Signal Far-Reaching Shift

Image: Taxes on GOP Healthcare Plan Could Signal Far-Reaching Shift
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By    |   Monday, 17 Jul 2017 12:57 PM

Republican efforts to reach a compromise among themselves that will enable the passing of a healthcare reform bill has revealed a division in GOP tax policy which could have long-term repercussions, The Wall Street Journal reported on Monday.

The philosophical divide among Republicans could particularly affect President Donald Trump's promised major tax reform legislation set for later this year.

Senate Majority Leader Mitch McConnell's latest revision of the healthcare bill keeps a 3.8 percent investment income tax and a 0.9 percent payroll tax from Obamacare that applies to those earning more than $200,000 and married couples earning more than $250,000.

This has pleased some moderate GOP senators who did not like the appearance of tax cuts for high-income households while placing a greater financial burden on those less well-off. But it has also upset conservative Republicans, who consider eliminating these taxes a crucial part of repealing Obamacare.

Americans for Tax Reform President Grover Norquist told CNBC's "Squawk on the Street" that the retention of those taxes will harm economic growth.

He said this meant that when tax reform is addressed by the Trump administration sometime later this year "we are going to have to back up and get rid of the anti-growth taxes that are not yet eliminated in the Obamacare repeal."

But the retention of the Obamacare taxes may signal a new Republicanism that, while not favoring tax increases, is less ready to have tax cuts mainly benefit high-income households.

The GOP has traditionally emphasized that tax cuts, even if the wealthy benefited more, would provide broad economic growth that would help everyone. But keeping some of the Obamacare taxes in the Republican plan demonstrates a more compromising GOP outlook.

"It shows how incredibly unpopular cutting taxes for the wealthy is and how powerfully that criticism has broken through and I think affected how some senators seem to be viewing this bill," Harry Stein, director of fiscal policy at the Center for American Progress, told The Wall Street Journal.

It remains to be seen how this possible ideological flexibility will affect tax reform, if indeed conservatives argue that a massive tax cut is now more vital to make up for the fact that some Obamacare taxes were retained.

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Republican efforts to reach a compromise among themselves that will enable the passing of a healthcare reform bill has revealed a division in GOP tax policy which could have long-term repercussions, The Wall Street Journal reported on Monday.
taxes, GOP, healthcare plan, signal, far-reaching, shift
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Monday, 17 Jul 2017 12:57 PM
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