Tax Reform Advances to Next Step in Senate, ANCOR Issues Tax Reform Principles

Since the U.S. House of Representatives introduced its version of the tax reform bill last week, it has passed out of the Ways and Means Committee (the committee of jurisdiction) with only 3 changes. These changes were: restoring the adoption tax credit, additional tax relief for pass-through businesses and higher tax rates on repatriated foreign earnings. The next step is for the House floor to vote upon the bill, at which point it will be sent up to the U.S. Senate.

Pending receiving the bill, the Senate has begun considering changes to the legislation that could cause conflict between the chambers and issued a discussion draft on Thursday. Changes from the House version include:

• Postponing the implementation of the $845 billion corporate tax cut until 2019 (in the House version it takes effect immediately);
• Completely eliminating the state and local tax deduction (the House only partially eliminated it);
• And keeping the medical-expense deduction, which the House had removed (with the proposed removal raising concerns within the disability and aging communities since besides Medicaid it is the only other federal relief for LTSS expenses).

Additionally, the House version of the bill adds $1.5 trillion to the federal deficit through tax cuts after 10 years, which affects the bill’s ability to be passed as a budget bill (which only requires the Senate to pass it by a simple majority vote instead of 60 votes). That is because a budget bill cannot create a deficit for more than 10 years. As such the Senate might have to make the tax cuts temporary to reduce this deficit. While discussions between the House and Senate have yet to begin, ironing out these differences could draw out and complicate the process of passing tax reform.

During this time, the President has sought buy-in from Democratic Senators in states that voted for him during the election, calling into a meeting they held with National Economic Council Director Gary Cohn to make the case for the bill. Read Senator King’s (I-ME) account of the call here.

While ANCOR is still reviewing contents of the bill for any provisions that could affect providers and the people they serve, the Board has approved 5 key tax reform principles recommended by Government Relations staff and GR Committee Leadership. These were shared with ANCOR members through the ACC– please see below if you missed that posting. These principles are designed to help guide ANCOR staff and member review of the proposal and subsequent drafts.

1. Any process that includes changes to Medicaid should be accomplished through a process that affords sufficient opportunity for legislators, advocates, and constituents to review and provide feedback on the proposal and legislative language prior to passage.
2. Individual or corporate tax cuts or expenditures must not be paid for by cuts to Medicaid, Medicare, Social Security, or other mandatory or discretionary programs that promote independence, inclusion, and community living for people with disabilities.
3. Tax reform should not decrease revenue to an extent that revenue is insufficient to continue to fund the programs and services and supports for people with disabilities at current levels or above.
4. The charitable deduction should be maintained and improved for the non-profit sector which provides the majority of services and supports for people with disabilities.
5. Unrelated business income tax should be held harmless to protect the vital role of of nonprofits and associations in the disability services sector.

If you have any questions or comments about the bill or ANCOR’s principles, please send them to Sarah Meek, Director of Legislative Affairs, at [email protected].