Yesterday, Republican members in the House of Representatives passed the American Health Care Act, H.R. 1628, by a 217-213 vote, with 20 Republicans and all Democrats voting against. Although the House made various health-policy and spending amendments to the bill since our March 21st post, the tax provisions described in that post survived with only one change – the repeal of the 0.9% Medicare surtax on wages above certain amounts was delayed to taxable years after December 31, 2022. Notably, the tax provisions included in the AHCA passed by the House includes the retroactive repeal (starting on January 1 of this year) of the 3.8% tax on certain net investment income under Section 1411 of the Code. The Congressional Budget Office and Joint Committee on Taxation estimate these two provisions alone amount to a tax cut of about $300 billion over 10 years.
The bill now moves on to the Senate, where it is expected to be significantly revised before facing a vote in the more-narrowly-controlled Republican majority chamber. The CBO has not yet released a revised estimate of the budgetary effects of the bill (taking into account the health policy and spending amendments), which leaves the bill’s fate temporarily uncertain under reconciliation procedures (for more on that see our post here). This may result in a delay as Senators work through procedural and substantive responses to the House bill — yesterday afternoon Senate Leader McConnell was reported as stating “It will be a real big challenge on the Senate side.”