What the end of the individual mandate would mean for you and tax reform:

What the end of the individual mandate would mean for you and tax reform:  

Bottom Line: Tuesday afternoon brought the revelation that the US Senate might take one last stab in 2017 at keeping part of their promise to voters regarding the Affordable Care Act while potentially delivering on meaningful tax reform. If it happens it might be Christmas miracle! You'll recall that the reason congress took up healthcare reform prior to tax reform was to pave a path for maximum tax cuts given the budget restrictions the Senate has to work within. While I don't put much stock in the CBO's estimates (they underestimated the cost of the Affordable Care Act by 120% for example), their numbers are the framework that's the baseline for reform in the Senate so they matter. 

According to the CBO, eliminating the individual mandate would save the Federal Government $338 billion over the next ten years. If you're wondering how the government would save money by eliminating a tax on Americans...The CBO suggests that fewer people who receive subsidies will seek policies to avoid the tax. That's a different topic for a different day. If you're wondering why it's come up on a tax bill that's because it is. It's important to remember that the ACA was deemed to be unconstitutional as passed by the United States Supreme Court unless the ACA mandates were deemed to be taxes. That's how Obamacare became the largest tax increase in American history.  

The CBO's guidance based on the recent budget deal allows for $1.5 trillion in tax cuts over the next ten years. The House tax plan's tag was estimated at $1.7 trillion. The Senate version checked in at $1.4. As you can infer the more extensive US House tax cut plan suddenly becomes viable in the Senate if they pass the repeal of the individual mandate. That would include the business tax cuts to kick in next year rather than 2019 as well. While it's unlikely that the Senate would just go with the House plan as is without changes is unlikely, however for those of us who believe in limited government, more control over our own healthcare and believe that we do a better job with our money than the federal government - we have the potential for a win-win-win that's a near best case outcome. It'd be a pretty incredible way to end a year of frustration with the inaction of Congress to keep their promises by passing tax and healthcare reform. What's more is that this would almost certainly ensure further action to be taken on healthcare reform early in 2018. I'm in X-Files territory - I want to believe. I won't believe it until I see it but I'm cautiously optimistic. 



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