The Tax Cut and Jobs Act (H.R. 1) cleared its first hurdle in the House late last week, passing with a vote of 227-205. Congress is out this week on Thanksgiving break, but discussion and negotiations continue and the Senate is expected to take up its version of tax reform, which passed out of the Senate Finance Committee, next week.
However, there continues to be significant differences between the two proposals that are important to the health care community, including:
- House version: proposes to eliminate hospitals’ ability to access low-cost capital financing through tax-exempt private-activity bonds and advance refunding bonds. This includes 501 (c)(3) hospital bonds. Also, the proposed changes would eliminate the ability for individuals or couples filing jointly to deduct qualified medical expenses that exceed 10 percent of their annual adjusted gross income.
- Senate Finance Committee version: includes a provision to repeal enforcement of the Affordable Care Act (ACA) individual health insurance mandate. The House legislation does not include this provision which the congressional budget office estimates would decrease the number of individuals with health insurance by 4 million in 2019 and 13 million in 2027.
- Both the House and Senate Finance Committee versions: contain provisions that would eliminate advanced refunding of outstanding tax-exempt bonds. However, the Senate Finance Committee version does not eliminate the Private Activity Bonds (PABs). Also, the imposition of a 20 percent excise tax on pay for certain “executive” employees of nonprofit organizations is included in both versions. The Senate Finance bill does not change an individual’s ability to itemize deductions for large medical expenses.
The next steps include: if the Senate approves their tax proposal, it would move to a joint conference committee to attempt to iron out differences. If successful, the revised bill would be subject to another House and Senate vote. President Trump has said that he wants a tax bill on his desk by the end of the year.
While they are back in the state, members are encouraged to share feedback with Sen. Thune, Sen. Rounds and Rep. Noem. The AHA Action Alert can be found here.