On Monday, Senate Finance Committee Chairman Mike Crapo (R-Idaho) revealed the Senate’s long-anticipated tax reform proposal. This plan builds on President Trump’s 2017 corporate tax cuts and suggests significant reductions in Medicaid funding, alongside the elimination of renewable energy tax incentives established during President Biden’s administration.
The legislative text, which can be found here, is central to Trump’s vision of a “big, beautiful bill,” featuring tax credits in line with the president’s populist campaign themes, including measures allowing him to generate income through tax adjustments.
Among its most contentious elements are stricter job and eligibility criteria aimed at decreasing the federal contribution to Medicaid expenditures in various states.
This aspect is particularly poised to create friction between the Senate and the House of Representatives.
Crapo plans to share the newly crafted provisions with his Republican peers in a meeting scheduled for Monday afternoon.
Two Republicans familiar with the legislation indicated that it may strengthen eligibility requirements for Medicaid and curb states’ abilities to raise federal Medicaid funding via healthcare provider taxes.
“That’s still in negotiation,” a GOP aide pointed out regarding the modifications to the Medicaid provisions passed by the House.
Several Republican senators—like Susan Collins (Maine), Josh Hawley (Missouri), Jerry Moran (Kansas), and Lisa Murkowski (Alaska)—have voiced concerns about the cuts to Medicaid funding approved by the House.
Earlier this month, the Congressional Budget Office (CBO) projected that the House’s proposed cuts would result in a reduction of $863 billion in Medicaid and Children’s Health Insurance Program (CHIP) funding over the next decade.
The CBO also warned that if the House measure is enacted, around 10.9 million more people could be without health coverage over the same period.
These deeper Medicaid cuts have been prompted by pressure from a number of Republican senators, including Senate Budget Committee Chairman Lindsey Graham (R-SC).
The House bill’s cuts amount to $1.6 trillion over ten years but would add $2.4 trillion to the federal deficit, according to the CBO.
The Senate version intends to maintain the $10,000 cap on the state and local tax (SALT) deduction and retract a component of a deal that would allow an increase of the SALT limit to $40,000 for households earning under $500,000 annually, an initiative pushed by Mike Johnson (R-LA).
Members of the House SALT Caucus have consistently warned the Senate about undermining their agreement with Johnson.
“Instead of jeopardizing this deal and risking the entire legislation, the Senate should collaborate with us to uphold its commitment to tax relief and advance our Republican agenda.”
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