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After Trump’s HealthCare Strike Out, Tax Reform is on Deck

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With healthcare DOA, the president has now vowed to focus on tax reform—an issue that many have said is closer to his heart than the American Health Care Act.

Last week, House Republicans were forced to pull the proposed replacement for the Affordable Care Act once it became clear that it didn’t have enough support. The void now leaves an opening for the President’s next big move.

“I would say that we will probably start going very, very strongly for the big tax cuts and tax reform. That will be next,” he said.

Though Trump had promised to repeal and replace Obamacare on day one of his presidency, he’s now said he’s content to let it “explode,” at which point he feels he’ll receive bipartisan support for the next iteration of healthcare reform.

The retail community, through the National Retail Federation, was in support of the American Health Care Act since it better addressed the special concerns of this business sector, according to Neil Trautwein, vice president of healthcare policy for the NRF. Trautwein said that with the unconventional hours of many in the retail workforce combined with a burdensome amount of reporting, made Obamacare a bad fit for an industry that accounts for one out of four jobs in the U.S.

The NRF supported much of the new plan, however.

“They say for employers we want to make sure you’re offering coverage to eligible employees but you can handle that through a simple existing form, the W2,” he told Sourcing Journal, enumerating the bill’s most favorable parts. “What we like about the new [AHCA] is that it gets rid of the employer mandate and roles back some of the pay forward taxes that get reflected in the cost of insurance premiums.”

But with healthcare off the table, Republicans are now focused on overhauling the tax code, which would be the first major change to the system in 30 years. Dubbed A Better Way, the tax plan calls for both individual and corporate tax cuts. A cornerstone of the plan is the border adjustment tax, which has U.S. corporations taking sides for and against it. The provision would reduce corporate taxes from 35 percent to 20 percent and tax the cost of goods on imports. Ultimately, the BAT is supposed to raise $1 trillion in revenue to cover the lower tax rate.

Proponents believe it will create 1.7 million jobs, encourage investment in the U.S. and help U.S. firms better compete against imports. Opponents argue the plan will create an undue burden on importers, forcing them to raise prices on consumer goods to the tune of $1,700 a year per American family.

The Americans for Affordable Products, a group of 400 corporate and association members—including Overstock.com, Aldo, Genesco, Spindler Textiles, J.C. Penney, Nike and Walmart—that has coalesced around this issue is for tax reform, minus the BAT. The group warned that tax reform could meet the same fate as healthcare if lawmakers aren’t careful.

“If leaders in the U.S. House learned anything from the failure of health care reform, they will acknowledge the lack of support for the Border Adjustment Tax and sideline it in the interests of passing legislation that lowers the rates across the board and eliminates loopholes exploited by the same companies seeking to operate tax free,” said Joshua Baca, spokesperson for Americans for Affordable Products. “Otherwise, Speaker Ryan and chairman Brady are placing at unnecessary risk the ability to pass tax reform legislation that fuels economic growth and job creation.”

For their part, the framers of the tax reform plan acknowledge the uphill nature of the battle after last week’s defeat.

“Yes this does make tax reform more difficult,” said House Speaker Paul Ryan, according to Time.com. “But it does not in any way make it impossible.”

“That just means the Obamacare taxes stay with Obamacare. We’re going to go fix the rest of the tax code,” he added, referring to the $1 trillion in taxes a repeal of the Affordable Care Act would have resulted in.

Some Republicans have expressed doubt in party leadership’s ability to make sweeping changes. Rep. Jodey Arrington said the events hurt the party’s momentum while Rep. Mike Kelly indicated that passing the health bill would have given Republicans a leg up going into the tax fight.

For his part, Treasury Secretary Steve Mnuchin is expecting to have an easier time with taxes. Plans are to gain approval for the changes by August, or fall at the latest.

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