After Health Care Setback, Trump Shifts To Tax Reform President Trump is eager to put the health care debacle behind him and focus on tax reform, but the failure to repeal the Affordable Care Act could handicap that effort.
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What Failure On Obamacare Repeal Means For Tax Reform

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What Failure On Obamacare Repeal Means For Tax Reform

What Failure On Obamacare Repeal Means For Tax Reform

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KELLY MCEVERS, HOST:

As we said, House Speaker Ryan and President Trump are ready to change the subject from health care to tax reform, but overhauling the tax code will not be easy. Experts say they'll have to clear some of the same hurdles that stopped them from repealing Obamacare. NPR's Scott Horsley reports.

SCOTT HORSLEY, BYLINE: President Trump has always been more passionate about cutting taxes than he is about wrestling with health insurance. During the campaign, he actually produced a plan for tax cuts. But passion alone will not be enough, says Bill Hoagland. He was a staffer for the Senate Budget Committee during the last big tax overhaul more than thirty years ago.

BILL HOAGLAND: Nothing's easy in this town anymore, including health care reform, and I think tax reform can be just as difficult.

HORSLEY: Like the health care fight, the push for tax reform is likely to expose fault lines within the Republican Party. Bill Gale of the Tax Policy Center says some who want to focus on corporate tax rates, others on the individual income tax. And some will be most concerned with how businesses are taxed internationally.

BILL GALE: It's certainly not a slam dunk that they will get tax reform through. On the other hand, if ever there was something that Republicans agree on, it's the desire to cut taxes.

HORSLEY: Gale says that agreement is the easy part, akin to Republicans' shared desire to repeal Obamacare. But just as lawmakers struggle to find a replacement for the Affordable Care Act, they may have trouble finding consensus on how to replace the tax revenue lost to lower rates. A preliminary House plan calls for making up some of that revenue by doing away with most itemized deductions, except for mortgage interest and gifts to charity. But Hoagland says people won't give up those tax breaks without a fight.

HOAGLAND: We've created so many tax credits, loopholes, exclusions, deductions. It is nigh near impossible not to have some winners and some losers in any kind of major tax reform.

HORSLEY: The House plan also includes a so-called border adjustment tax that would raise a lot of revenue while subsidizing exports and penalizes imports. Hoagland, who's now the Bipartisan Policy Center, says attitudes towards that tax are deeply divided within the business community. Companies that sell a lot of goods overseas support the idea. Those that buy a lot from foreign countries don't.

HOAGLAND: I think that that particular proposal is not likely to make it through the sausage mills up there, particularly in the Senate. I think they're going to have to look for something other than that border adjustment tax.

HORSLEY: Gale notes one of the biggest evangelists for the border adjustment tax has been House Speaker Ryan, but after last week, he may not be the most effective salesman.

GALE: To the extent that his personal stock has taken a hit on the health care debacle - that is going to make the border adjustment tax harder to get enacted.

HORSLEY: When Republicans couldn't agree on a replacement for Obamacare, their repeal effort died, but with tax policy, there's another option. If they can't agree on a major tax overhaul, Republican lawmakers could simply cut tax rates and call it a day. Congressman Mark Meadows of the House Freedom Caucus argued on ABC's "This Week" lawmakers shouldn't have to balance tax cuts with alternative revenues or spending cuts.

(SOUNDBITE OF TV SHOW, "THIS WEEK")

MARK MEADOWS: Tax reform and lowering taxes will create and generate more income. And so we're looking at those - where the fine balance is. But does it have to be fully offset? My personal response is no.

HORSLEY: That would no doubt add to the federal deficit, but the future generations who'd end up paying for the tax cut won't be at the bargaining table to negotiate. Scott Horsley, NPR News, Washington.

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