By Susan Heavey

By Susan Heavey

 

WASHINGTON (Reuters) - The head of the U.S. Senate Finance Committee proposed major changes to a Republican tax reform plan, adding a repeal of Obamacare's health insurance mandate and making corporate tax cuts permanent while ending individual cuts in 2025.

 

In a statement late on Tuesday, committee chairman Orrin Hatch said the proposed changes would also slightly lower some individual tax rates and includes a repeal of the alternative minimum tax but only through 2025, when it would be reinstated.

 

The 226-page amendment comes as the Senate continues to craft its version of tax reform alongside the U.S. House of Representatives, which is finalizing its own bill. The two plans must be reconciled and merged into a final plan that can pass both chambers before it goes to President Donald Trump to sign into law.

 

Republicans, who control Congress and the White House but have yet to pass any major legislation, are eager for a legislative victory ahead of the 2018 midterm elections and are pushing hard to pass tax cuts by the end of the year.

It was not immediately clear how many of Hatch's colleagues will support the plan in the Senate, where Republicans hold a slimmer 52-48 majority than in the House.

Democrats have dismissed the Republican plans as giveaways to corporations and the wealthy that would swell the nation's deficit. If Democrats remain united in opposition, Republicans cannot lose more than two senators from their ranks and still have enough votes to pass tax legislation.

The inclusion of the healthcare provision, however, could add to the uncertainty, given that Republicans earlier this year failed to make good on their pledge to repeal and replace former President Barack Obama's 2010 healthcare overhaul.

Hatch's changes would end one of the more unpopular provisions in Obama's Affordable Care Act that require Americans to obtain health insurance or pay a penalty. The nonpartisan Congressional Budget Office estimated that the change would increase the number of uninsured by 13 million people by 2027.

"By scrapping this unpopular tax from an unworkable law, we not only ease the financial burdens already associated with the mandate, but also generate additional revenue to provide more tax relief to these individuals," Hatch said in a statement.

Republican U.S. Senator James Lankford on Wednesday said the Obamacare change was unlikely to sink the bill, given "pretty strong agreement among Republicans that we don't like the individual mandate."

"This was a tax intended to push people to be able buy the product, but it actually landed on people that can afford it the least," he told MSNBC television. He added that Congress would have to re-evaluate the individual tax cut expiration in 10 years and if the economy remained strong hopefully extend it.

Trump has backed the inclusion of the mandate repeal in the tax bill, and a key Republican Senator, conservative Rand Paul, also supports it. Paul did not back previous Obamacare repeal efforts this year.

But several moderate Republicans, Senators Susan Collins and John McCain whose 'no' votes sank earlier healthcare efforts, expressed uncertainty on Tuesday over tying the tax bill to the healthcare provision details.

U.S. House Speaker Paul Ryan told CNBC television on Wednesday that while the House Republican tax plan does not repeal the mandate, the House would likely approve a final measure hammered out with the Senate that included it.

Hatch's Senate plan would also expand access to deductions for so-called "pass-through" businesses. It also increases the child tax credit to $2,000 from the earlier proposed $1,650, a change lauded by several Republican senators. The current tax credit for children is $1,000.

The changes would still keep the tax bill's cost within procedural limits, adding just under $1.5 trillion over 10 years to the federal deficit and the national debt, according to an estimate released by Hatch.

Republicans, who have decried deficit-adding policies, are using a procedural maneuver known as reconciliation to pass the bill with a simple majority in the Senate but cannot exceed the $1.5 trillion ceiling.

(Reporting by Susan Heavey; Additional reporting by David Alexander and Katanga Johnson; Editing by Jeffrey Benkoe)