The Senate Finance Committee announced today that it would add to the Senate tax reform bill a zeroing out of Obamacare’s individual mandate surtax, in essence repealing the mandate. This is a big tax cut aimed squarely at America’s middle class.

The mandate is a tax which punishes those who can least afford it

Obamacare’s individual mandate is enforced by the collection of a surtax on income. Failure to purchase Obamacare insurance triggers the surtax.

In 2017, the surtax is equal to the greater of:

  • 2.5 percent of adjusted gross income, or
  • the dollar penalty

The dollar penalty is $695 for every adult in the household, plus $347.50 for every child in the household, with a household maximum of $2085.

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Senate Republicans have added the repeal of Obamacare’s individual mandate to the latest version of their tax bill, with several key swing votes saying they’re open to the idea.

Late on Tuesday, the chairman of the Senate Finance Committee, Orrin Hatch of Utah, released a new bill that would eliminate the mandate’s fines beginning in 2019. The addition was discussed at a closed-door party lunch meeting earlier in the day, and several Republican senators said no one spoke out publicly against repealing the mandate.

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Last night, Sen. Orrin Hatch (Utah) announced that the Senate Republican tax reform bill would include a repeal of Obamacare’s individual mandate. Why is this a big deal? It all goes back to the profound impact of Congress’ official fiscal scorekeeper, the Congressional Budget Office.

The single most important reason that Republicans failed to replace Obamacare in 2017 is because of estimates by the Congressional Budget Office that 22 million fewer people would have health insurance in 2026 under the GOP bills.

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The tax-reform bill that Senate Republicans are releasing Thursday does not repeal ObamaCare’s individual insurance mandate, though the provision could be added down the line, GOP senators said.

Senators leaving a briefing about the legislation said repealing the mandate is not in the initial text of the legislation, but cautioned that the issue is still under discussion.

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The Senate GOP tax bill will retain a key deduction for qualified medical expenses that was excluded from the House version, according to a Republican senator on the Senate Finance Committee.

Sen. Bill Cassidy (R-La.) told reporters that the deduction will remain in the initial version of legislation the Senate is set to unveil today. “I think there’s always a sense that it’s a good thing to continue,” Cassidy said.
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Republicans in Congress are plowing ahead on tax reform, and one obstacle is the complexity of Senate budget rules that limit how much taxes can be cut. The good news is that for once Washington’s fiscal fictions could be deployed to improve policy by repealing ObamaCare’s individual mandate as part of tax reform.

The Senate Finance Committee on Thursday released the details of its tax proposal, which includes a permanent 20% corporate rate and more. Senators Pat Toomey and Bob Corker cut a budget deal to allow for $1.5 trillion in net tax cuts over 10 years without accounting for faster economic growth (and more revenues) as a result of reform.

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Conservatives are attempting to revive efforts to gut Obamacare’s individual mandate as part of the Republican overhaul of the tax code.

But the House’s top tax writer, while leaving the door open to a measure President Donald Trump supports, said Friday that such a move would complicate the tax package’s prospects, particularly in the Senate.

“The president feels very strongly about including this at some step before the final process,” House Ways and Means Chairman Kevin Brady said of mandate repeal during a POLITICO Playbook interview. “No decisions have been made.”

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Although the GOP’s plan to repeal the Affordable Care Act industry taxes died with the party’s health care bill, it’s conventional wisdom that some of the taxes will still be delayed. But there’s no plan to do so yet.
Lobbying campaigns to repeal or delay the health insurance tax and the medical device tax are ramping up, yet there’s no clear vehicle for Congress to take action. Well-wired lobbyists and Hill aides say the appetite for doing anything major on health care isn’t really there.

“It is a have-to-get-done that’s really hard to get done,” said one lobbyist.

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Congressional Republicans plan to use the next four weeks away from Washington making a public case for a sweeping rewrite of the tax code, an ambitious legislative undertaking they hope will heal divisions that opened when the party’s signature health-care bill collapsed. But at home in their districts, they face pressures that could make it hard to focus on taxes.

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Obamacare gave the federal government a heretofore unprecedented power: the power to force us to buy health insurance irrespective of our desire to do so. Republicans, for both moral and economic reasons, oppose this mandate. The framers of the Constitution never envisioned granting Congress the power to force people to buy a privately delivered financial service. There are also important economic reasons to oppose Obamacare’s mandate. Gross premiums for individually purchased coverage have doubled over the past four years under Obamacare. But the authors of Obamacare don’t need to care about whether they’ve made coverage costlier, because they’re forcing you to buy it anyway. Without a mandate, insurers would have to do what businesses have to do in every other sector of the economy: design products that you voluntarily want to buy because they represent a good value for you. Under Obamacare, they don’t have to.

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