GOP senators mull cutting tax break for wealthy
WASHINGTON — Republican senators seeking to retool their troubled health care bill are considering dropping a tax break on investments for higher-income families in order to expand access to subsidies for health care coverage.
Sen. Mike Rounds, R-S.D., told the Washington Examiner that Republican leadership will explore his idea of cutting the 3.8 percent tax break on investment income for families making more than $250,000 per year. The extra money could be used to expand access to subsidies for the health insurance exchanges to spouses of people who receive health insurance through their job but are ineligible for coverage.
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According to the Congressional Budget Office, the tax break would cost about $172 billion over 10 years. Eliminating it would give Senate Majority Leader Mitch McConnell breathing room to appeal to the moderates in his caucus by ensuring more people will receive coverage under the plan. The CBO estimated 22 million fewer Americans would be insured under McConnell’s bill than under current law, which helped torpedo his plan for a vote on the legislation ahead of the July 4 recess.
The move would also help fend off Democratic criticisms that the Republican alternative to Obamacare amounts to a Robin Hood effort in reverse. “The details have changed a bit around the edges, but the core has remained the same in each and every version [of the bill]: slash Medicaid to the bone in order to give a massive tax break to a very small number of wealthy Americans,” Sen. Chuck Schumer, D-N.Y., said of the Republicans’ plan on the Senate floor Wednesday.
Two other GOP senators, Sen. Susan Collins, R-Maine, and Sen. Bob Corker, R-Tenn., have also sounded open to the idea. “I do not see a justification for doing away with the 3.8 percent tax on investment income, because that is not something that increases the cost of health care,” Collins told Bloomberg News. “So I distinguish between those tax increases that were part of Obamacare that increase premiums and the cost of health care versus those that do not.”
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It’s possible that Senate conservatives such as Sen. Ted Cruz, R-Tex., who opposed the bill earlier this week because it does not repeal enough of Obamacare, will object to leaving an Obamacare tax in place. But one of those holdout conservatives, Sen. Mike Lee, R-Utah, said in a statement Tuesday that he opposed the Senate bill since it “included hundreds of billions of dollars in tax cuts for the affluent” while ignoring the middle class. A spokesman for the senator declined to comment on whether he would support ending the tax break.
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