RPEC Weekly ACTION Newsletter – 12-08-2017
In This Edition
- UBIT Would Erode Washington State Investment Board Returns
- WA Sens. Cantwell and Murray Appointed to the Tax Bill Conference Committee
- House Speaker Ryan Announces Attack on Medicare & Medicaid in 2018
- Senators Seek to Block Trump Cuts to Drug Discount Program
UBIT Would Erode Washington State Investment Board Returns
The tax overhaul bill (Tax Cuts and Jobs Act) passed in the House includes an unprecedented tax on investment returns by the Washington State Investment Board (WSIB) that would cripple its ability to pay out pensions. The Senate passed its version of tax reform which did NOT contain the UBIT provision, but both bills need to be reconciled in conference.
Gov. Jay Inslee said “House and Senate GOP Tax Plans would, for the first time, subsect the investments of state and local government pension plans to the unrelated business income tax (UBIT).
“Historically, states and the federal government have been immune from taxing one another. This radical change would erode that immunity and effectively take money out of the pockets of nearly 320,000 current and future public workers in Washington State covered by public pensions, including teachers, firefighters, law enforcement officers, public safety employees and judges. It would also directly increase costs on the state and local governments that offer and contribute to these public pension plans.”
The Washington State Investment Board (WSIB) produces 75 cents of every dollar paid out by the Department of Retirement Systems to public sector pensions. This means that the WSIB turns the contributions from employees and the employers (states, cities, and counties) into a significant economic driver producing $8.95 of total economic output for every $1.00 contributed by taxpayers to Washington Pensions over 30 years.
WA Sens. Cantwell and Murray Appointed to the Tax Bill Conference Committee
From The Seattle Times – Sens. Patty Murray and Maria Cantwell of Washington were tapped for the conference committee that will hash out the GOP tax bills passed by the U.S. House and Senate.
The conference committee, where the House and Senate bills will be reconciled, is the last chance for Democrats to influence the tax bill that has moved through Congress at blinding speed. The House and Senate versions of the bill reduce the corporate tax rate to 20 percent from 35 percent, raise the standard deduction for individuals but eliminate many other deductions.
The Washington senators were outspoken in their opposition to the bill and how quickly it came to be. Of particular interest to Washingtonians are the proposed elimination of state and local tax deductions, including sales taxes, Murray said in a statement.
Murray and Cantwell are joined on the committee by Democratic Sens. Ron Wyden of Oregon, Debbie Stabenow of Michigan, Bob Menendez of New Jersey and Tom Carper of Delaware, as well as independent Sen. Bernie Sanders of Vermont. On Wednesday Senate Majority Leader Mich McConnell appointed to the committee Republican Sens. Orrin Hatch of Utah, Lisa Murkowski of Alaska, John Cornyn of Texas, Mike Enzi of Wyoming, Pat Toomey of Pennsylvania, Rob Portman of Ohio, Tim Scott of South Carolina and John Thune of South Dakota.
It is expected the Conference Committee to conclude by the end of next week, though it is possible it could go to December 22. The House is scheduled to go on Winter break on December 14 and the Senate on December 15.
We will keep an eye on the progress of the conference as we will be making phone calls to lawmakers as soon as either chamber prepare to vote on the reconciled bill.
House Speaker Ryan Announces Attack on Medicare & Medicaid in 2018
From The Hill – House Speaker Paul Ryan (R-Wis.) on Wednesday said House Republicans will aim to cut spending on Medicare, Medicaid and welfare programs next year as a way to trim the federal deficit.
“We’re going to have to get back next year at entitlement reform, which is how you tackle the debt and the deficit,” Ryan said during an interview.
Health-care entitlements such as Medicare and Medicaid “are the big drivers of debt,” Ryan said, “so we spend more time on the health-care entitlements, because that’s really where the problem lies, fiscally speaking.”
Sen. Marco Rubio (R-Fla.), last week, said “instituting structural changes to Social Security and Medicare for the future” will be the best way to reduce spending and generate economic growth.
Senators Seek to Block Trump Cuts to Drug Discount Program
From The Hill – Six senators, including three Republicans, are asking GOP leadership to block a Trump administration rule that slashes funding for a federal drug discount program.
The program, called 340B, requires drug companies give discounts to health-care organizations that serve high volumes of low-income patients.
But a new rule from the Centers for Medicare and Medicaid Services, which takes effect Jan. 1, cuts Medicare payments to hospitals enrolled in the program by $1.6 billion.
The senators are urging the cuts to be reversed in the year-end spending deal.
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