Joseph Lawler of the Washington Examiner explains how the failure of congressional efforts to repeal and replace Obamacare will affect tax reform proposals.
Republicans’ plan to ditch healthcare to work on tax reform will be complicated by the fact that leaving Obamacare in place means keeping $700 billion in taxes, many of which are hated by some of the small businesses Republicans are trying to help.
Sen. Orrin Hatch and Rep. Kevin Brady, the top Republican taxwriters who will be tasked with writing the overhaul of the tax code, have said that they oppose the taxes and would prefer to see them eliminated in any scenario, but they have not said specifically if or how they might be repealed and their revenues replaced in tax reform.
The problem facing GOP lawmakers is that if they want to eliminate those $700 billion in taxes as part of tax reform without adding to the deficit, they would have to do so by eliminating a proportionate amount tax breaks, a possibility sure to invite fierce opposition from interests that benefit from those provisions in the tax code. Already, Republicans are on a collision course with the real estate industry and many others.
“It kind of creates a hole or a negative in trying to have a revenue-neutral tax reform bill,” said Saul Rudo, the national head of tax planning at Katten Muchin Rosenman.
