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Senate Republicans Attach Obamacare Tax Repeal To Tax Package

Mike Godfrey, Tax-News.com, Washington

15 November 2017


An amendment has been included in the US Senate's tax reform proposals that will effectively repeal the Affordable Care Act's individual mandate.

Senate Finance Committee Chairman Orrin Hatch (R-UT) announced the inclusion of the amendment on November 14, along with other changes to the Senate proposals, which are currently being marked up by the committee, affecting pass-through businesses and individual income tax payers.

The individual mandate requires individuals to maintain a minimum level of health care insurance coverage or face paying a fine to the Internal Revenue Service on their annual tax return, known as a "shared responsibility payment."

According to the Joint Committee on Taxation, repealing the mandate would cut the number of taxpayers obtaining healthcare coverage that is subsidized under Obamacare and therefore cut government spending. Reducing the individual mandate to zero, as proposed, it said, would raise USD318bn over 10 years. The Congressional Budget Office says the measure would reduce the number of insured persons by 13 million.

The proposal would eliminate the mandate after December 31, 2018. Eligible individuals who choose to enroll in coverage would continue to receive premium tax credits to help them afford coverage.

According to Hatch, amendments proposed to the Senate bill would boost middle-class relief, give job creators greater certainty, and put the bill in line with budgetary rules.

The chairman's modification also includes additional tax relief for pass-through businesses. Under the changes, taxpayers with taxable income of up to USD500,000 filing jointly (USD250,000 for individual taxpayers) would be exempt from the W-2 wage limitation that otherwise might limit taxpayers from obtaining the full benefit of the proposed 17.4 percent deduction on their qualifying pass-through income.

In addition, pass-through income up to the same thresholds from services businesses would also fully qualify for the 17.4 percent deduction, up from USD150,000 for joint filers and USD75,000 for other individuals, in the first draft of the chairman's mark.

In other modifications, three of the seven proposed tax brackets have been revised down as follows: 22.5 percent to 22 percent; 25 percent to 24 percent; and 32.5 to 32 percent.

TAGS: individuals | Finance | tax | business | law | insurance | budget | tax credits | health care | legislation | United States | tax reform | individual income tax | services | Tax

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