Though Senate leadership recently decided to delay a vote on its plan to repeal and replace the Affordable Care Act, the GOP is still hoping to get the details of that bill ironed out before the holiday. One possible change involves a controversial tax on the wealthy that has long been a target of repeal advocates.
The current version of the Better Care Reconciliation Act would eliminate a 3.8% tax on investments that only applies to individuals earning more than $200,000 per year or married couples earning a total of $250,000, and only on earnings from things like capital gains, investment interest, dividends, and annuities.
Critics of this tax cut — which would total more than $172 billion over the next ten years, according to the Congressional Budget Office — have characterized it as a giveaway to the wealthy, especially as the tax repeal offers no apparent direct benefit to the insurance markets.
Multiple reports now indicate that the GOP is leaning toward keeping this tax in place and using the money to help pay for subsidies that would keep insurance premiums affordable.
Speaking this morning, Sen. Bob Corker (TN) said the GOP wants to “address the issue of ensuring lower-income citizens are in a position to buy plans that are actually provide them appropriate healthcare,” and that he believes “my sense is the 3.8% repeal will go away.”
This move might help convince some moderate Republicans to ultimately vote in favor of the BCRA. However, keeping the tax may upset the balance and push some more conservative senators to question their support.
“I don’t remember anybody going around saying oh, except for these job-killing tax increases,” said Sen. Pat Toomey of Pennsylvania today about the possibility of keeping the investment tax. “So I expect that we’ll be repealing all the taxes.”
Cutting the ACA’s taxes has been a key promise for some lawmakers like Toomey, who received hundreds of thousands of dollars in campaign contributions from Club for Growth, an organization whose stated focus is reducing taxes and cutting government spending. In fact, Toomey served as president of CFG between his stints in the House and Senate.
Other top senate recipients of Club For Growth contributions, like Ron Johnson of Wisconsin and Utah’s Mike Lee, have been more explicit in their disapproval of this bill. Lee, along with Ted Cruz (TX) and Rand Paul (KY), is among the hardline conservatives who have dubbed the BCRA “Obamacare Light,” while Johnson penned a NY Times op-ed piece this week saying he could not support the bill in its current state.
It’s not known if the decision on the investment tax will be made before the July 4 holiday, or in time for the next estimate of the BCRA’s effects from the Congressional Budget Office. Rather than wait for each new iteration of the BCRA to be finalized, Majority Leader Mitch McConnell has reportedly been providing the CBO with incremental updates to the legislation to expedite their review.
The GOP can only lose two Republican members to “no” votes if it hopes to pass this bill. Currently, there are at least five senators — from both ends of the party’s ideological spectrum — who have indicated they would not vote for the proposal as initially released by McConnell.