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Republicans agree on budget with expedited procedures for health care repeal

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Tax Hot Topics May 2015House and Senate Republicans have agreed on a conference report for their budget resolutions that would allow the tax-writing committees to use reconciliation procedures to expedite tax legislation.

The reconciliation process protects legislation from filibusters and other 60-vote procedural hurdles in the Senate. The 2001 and 2003 tax cuts by the Republican Congress and President George W. Bush were passed with simple majority votes in the Senate using reconciliation.

The budget resolutions instruct the Senate Finance Committee and the House Ways and Means Committee to report legislation that would reduce the deficit by at least $1 billion over 10 years. These instructions would generally allow the committees to advance a tax bill of nearly any size as long as the overall score raised at least $1 billion, meaning it could not be legislation scored as an overall tax cut. However, the budget agreement also instructs the Senate Budget Committee to use reconciliation on health care repeal. This instruction is not completely binding and would leave tax-writing committees some flexibility on how to craft a reconciliation bill.

Republicans have no plans to shoehorn tax reform into a reconciliation package, and GOP leaders said they wanted to use reconciliation in regard to health care in case the Supreme Court rules in King v. Burwell (No. 14-114) that individuals are not entitled to premium tax credits on federal exchanges. Such a decision would undermine the employer excise taxes for coverage failures and could make it difficult to continue administering much of the health care reform legislation as originally intended.

If Republicans pursue tax reform, they will have to do so without any special procedural protections from reconciliation. Treasury Secretary Jacob Lew recently called on Congress to complete corporate tax reform by the end of May to help fund the highway bill. Senate Finance Committee Chair Orrin Hatch, R-Utah, said that objective was unlikely, and that his committee would instead look to generate $10 billion in revenue offsets to pay for a funding extension through the end of the year. The Senate Finance Committee working groups on tax reform are not scheduled to report recommendation until the end of May.

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