By John Gimigliano, Principal in Charge, Federal Legislative & Regulatory Services, Washington National Tax, KPMG LLP
Mar 10, 2017
This week featured “all-nighter” markups of the proposed healthcare legislation, but the path to approval remains unclear.
Thus far, the Republican-sponsored healthcare proposal has received no support from Democrats. And it’s far from clear there’s enough Republican support for the healthcare proposal currently on the table to get it through the House and Senate.
Implication for tax reform? The healthcare reform process may hold some interesting parallels to what we can expect to see with the upcoming tax reform process:
- It’s hard to get enough support for major policy changes that create “winners” and “losers.”
- Strong Congressional and Presidential leadership will be needed to enact significant policy change.
- While Republicans may agree in principle on broad policy goals (e.g., repealing and replacing “Obamacare,” reforming the U.S. tax code), they have different views on the specifics of how to do it.
- Compromise among Republicans may be necessary, but may not necessarily be easy to achieve.
- Expending political capital today could leave less available for tomorrow.
Healthcare-related obstacle: Healthcare legislation may also impact the timing of tax reform. Here’s why: The Republicans are using a special “budget reconciliation” process so they can get healthcare legislation approved without Democrat support. But this process only allows one budget item to be “open” at a time—in this case, healthcare. (Watch this five-minute video Senate Procedural Requirements Explained for an overview of how the reconciliation procedure works.).
Since Republicans also plan on using this budget reconciliation process for tax reform, they’ll likely have to wait until after healthcare reform is enacted before they can begin taking serious action on tax reform. So even if there was widespread agreement on the specifics of tax reform, it still may be delayed until healthcare reform is resolved.
This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG LLP.
The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.