2017 tax reform proceeds to possible summer enactment

Lawmakers continue to debate comprehensive 2017 tax reform, aiming for a package to clear Congress and signed into law by the president before summer. At the same time, a “mini” tax reform package in an Affordable Care Act repeal and replacement plan appears to have stalled in Congress.

Tax reform for individuals and businesses is being driven by two proposals: ones made by President Donald Trump during the campaign last year and one set out by the House GOP. In many areas, the two find common ground, including consolidation and a reduction in the income tax rates for individuals, a cut in the corporate tax rate, elimination of the federal estate tax, and abolishment of the alternative minimum tax (AMT). The president has also called for new tax incentives for child and elder care.

Closely related to tax reform is infrastructure spending. In January, President Donald Trump called on Congress to support a $1 trillion spending initiative for highways, bridges, and other developments. White House officials indicated that tax credits of some type would be part of the proposal. In March, a senior GOP lawmaker indicated that infrastructure spending could be part of a federal aviation bill this year. Infrastructure spending is an area where there may be bipartisan support.

At the 11th hour, House republicans pulled their ACA repeal and replacement plan ACHA from the House floor. The ACHA would have repealed the ACA’s tax measures, including the

  • Net investment income (NII) tax
  • Additional Medicare tax
  • Excise tax on certain medical devices
  • Excise tax on tanning services

The excise tax on high-dollar health insurance plans (also known as the “Cadillac plan” tax) would have been delayed. The medical expense deduction would have been returned to its pre-ACA parameters. In place of the premium assistance tax credit, the ACHA would have provided a new tax credit generally based on an individual’s age.

For now, ACA repeal and replacement appears to have been moved to the back burner in the House. The statute remains in place. There could, however, be some changes to regulations under the ACA.

If you have any questions about tax reform, health care reform, or any federal legislative developments, please contact our office.