Greg Valliere of Horizon Investments.

Senate Finance Committee Chairman Orrin Hatch amended the Senate’s Tax Cuts and Jobs Act Tuesday afternoon to repeal the tax penalty for the uninsured in the Affordable Care Act, make the 20% corporate tax rate permanent and provide more tax relief for pass-through businesses.

The updated chairman’s mark of the legislation also incorporates amendments that were filed by both finance committee Republicans and Democrats.

Other modified provisions include reducing individual rates in some of the tax brackets, from the current 22.5% to 22%; 25% to 24%; and 32.5 to 32%. The child tax credit is also doubled, from the current $1,000 to $2,000.

Greg Valliere, chief global strategist for Horizon Investments, said Wednesday morning that the bill’s provision killing the individual health mandate complicates the entire tax bill.”

Valliere notes that House GOP leaders had rejected the idea of attaching the Obamacare provision to their tax bill, which should pass on the House floor Thursday or Friday.

“House Republicans would gladly agree in a conference committee to kill the main provision of Obamacare,” he wrote, “but the key issue obviously comes first – are there are enough votes to do that in the full Senate?”

Noting how the Obamacare bill failed in the Senate months ago, “the same cast of characters could oppose it: GOP Sens. Susan Collins, Lisa Murkowski and John McCain (although the latter may vote for the bill),” Valliere said. Other possible no votes could come from Sens. Jeff Flake and Bob Corker, “who are opposed to a tax bill that could lose $1.5 trillion.”

The Senate Finance Committee continued marking up the bill Wednesday morning. The Senate hopes to vote on the bill on Thursday.

Senate Democratic leader Chuck Schumer said Wednesday morning that with the modified plan, “Republicans have put themselves between a rock and a hard place: dramatic tax increases on the middle class or a huge hole in the deficit.”

Stated Schumer: “Either tens of millions of taxpayers will pay significantly more the longer this plan is in effect, or a future Congress will extend the tax breaks, making the deficit hole they create massively deeper.”

In announcing the amendments, Hatch said that the modified mark “will effectively repeal the individual mandate tax to help provide additional relief to low- and middle-income families, create more certainty for American job creators by ensuring business provisions — like the globally competitive corporate tax rate and international tax system — are permanent, and work[s] to address the so-called Byrd Rule to ensure the legislation complies with the Senate budgetary rules for reconciliation.”

Repealing the individual mandate under the Affordable Care Act, aka Obamacare, will get rid of the “burdensome tax [that] is levied against the American people, forcing them to either pay a fine or pay for health coverage they don’t want and can’t afford,” Hatch said.

He cited Internal Revenue Service data, which found that nearly 80% of Americans who paid the penalty in 2015 made less than $50,000.

The Joint Committee on Taxation also found that “reducing the individual mandate tax penalty to zero will raise $318 billion over 10 years — money that can be used to provide further tax relief to American families,” Hatch said. “Eligible individuals who choose to enroll in coverage will continue to receive premium tax credits to help them afford coverage.”

The modified bill also includes additional tax relief for pass-through businesses (e.g., partnerships and S corps), including services pass-through businesses. 

Taxpayers generating taxable income of up to $500,000 (married filing jointly) or $250,000 (all others) would be exempt from the W-2 wage limitation that otherwise might limit taxpayers from obtaining the full benefit of the 17.4% deduction on their qualifying pass-through income, according to the amendment.

In addition, pass-through income from services pass-through businesses for taxpayers with taxable income up to these levels would fully qualify for the 17.4% deduction.  

The bill also “shifts in the structure” of the international tax system.