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GOP Splits Over Health-Law Taxes, Signaling a Shift


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WASHINGTON—Republican efforts to pass a health-care bill have revealed a party fissure on health-related taxes with potentially far-reaching repercussions.

In his latest attempt to rewrite President Barack Obama’s signature health-care law, Senate Majority Leader Mitch McConnell (R., Ky.) retained a 3.8% investment-income tax and a 0.9% payroll tax that apply to individuals earning more than $200,000 and married couples earning more than $250,000.

The decision to keep the taxes instead of repealing them satisfied senators such as Mike Rounds of South Dakota and Bob Corker of Tennessee, both Republicans, who were worried about losing revenue sources and about the optics of reducing taxes on high-income households. But it infuriated conservatives who see the taxes as a drag on economic growth and view removing them as an important part of repealing the 2010 Affordable Care Act.


“They’re all wusses,” said Larry Kudlow, the CNBC economic commentator. “How is it possible after all these years of studying the capital-gains tax? How is it possible that they don’t know that [cutting] it promotes growth?”

The party’s longstanding focus on lowering marginal tax rates to spur investment and growth is colliding with some members’ concerns about the merits and politics of cutting taxes for businesses and high-income households while proposing other policies, in this case on health care, that could place a greater financial burden on low-income households.

The challenge could re-emerge when the party moves on later this year to an effort to rewrite U.S. tax law.


To tax or not to tax?

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