Senate healthcare bill likely to keep Obamacare taxes

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A Senate bill to repeal and replace portions of Obamacare likely will maintain the healthcare law’s 3.8 percent investment tax and 0.9 percent Medicare surtax on upper-income earners, Republican senators said Tuesday.

Senate Republican Conference Chairman John Thune, of South Dakota, said Republican lawmakers have been discussing a plan to maintain the investment tax, which would produce $172 billion more over 10 years compared with the previously released version of the Senate bill. Combined with the Medicare tax, the new plan would give Republicans about $230 billion to work with in an effort to woo holdouts.

“I don’t think anything is final, but obviously that is the direction I think a lot of our members want to move,” Thune said after a closed-door meeting with GOP lawmakers. “Which is to keep some of those [taxes] in place and be able to use those revenues to put into other places in the bill where it can make a difference.”

An earlier version of the bill would have reduced the Affordable Care Act’s taxes by $701 billion, according to the Congressional Budget Office. Republicans were hoping to take advantage of a lower baseline for tax revenue that would be created with the health legislation ahead of their push for tax reform.

Republican lawmakers have privately urged Senate Majority Leader Mitch McConnell, R-Ky., to ensure the bill keeps the Net Investment Income Tax on capital gains and dividends for households making more than $250,000 a year. Republicans said they did not like the appearance of eliminating a tax that benefits many upper-income earners while reducing the growth of Medicaid.

Democrats have frequently criticized the GOP healthcare proposal over the tax cuts. Senate Minority Leader Chuck Schumer, of New York, said last month that the GOP planned to reduce healthcare benefits for the poor and the sick “to pay for a tax break for the wealthiest few.”

“That is not an equilibrium that is appropriate,” said Sen. Bob Corker, R-Tenn.

McConnell said a draft of the legislation will be released this week and a vote on the measure is likely to be scheduled next week.

A move to maintain any of the Obamacare taxes is likely to anger conservatives and conservative outside groups.

The Net Investment Income Tax, “just like any tax increase, is an anathema to conservatives as it suppresses economic growth and opportunity throughout our nation,” David McIntosh, president of the conservative Club for Growth, said last week. “Under no circumstances should the NIIT be included in any forthcoming Republican ‘repeal’ bill.”

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Senate healthcare bill likely to keep Obamacare taxes

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