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Norquist: Health care reform must come before tax reform

Nicole Sinclair
Markets Correspondent

On Friday, President Donald Trump told reporters that he is moving on after the Republican health care bill was pulled from a floor vote in the House of Representatives.

As market and political analysts work to understand what the bill’s failure means for the future of tax reform, one outspoken advocate for tax cuts expressed concern.

Grover Norquist, president and founder of Americans for Tax Reform, a politically conservative organization that opposes all tax increases, said health care reform is an essential first step to achieving significant tax reform.

“It has to go first in order to have a significant tax cut as part of tax reform,” he said, referencing the changes outlined in the original GOP proposal.

“[Health care reform] really is the most important piece of legislation to Trump’s presidency,” Norquist added. “Congressmen and senators are going to try to extort the best deal they can out of it.”

The initial failure of the American Health Care Act (AHCA) calls into question the ability of Trump and the Republican-led Congress to pass other major legislation, analysts argue.

Congressional Republicans on Monday, March 27, 2017, pointed fingers and assigned blame after their epic failure on health care and a weekend digesting the outcome. (AP Photo/Evan Vucci, File)

The Congressional Budget Office (CBO) concluded that the Republican Health Plan will increase the number of uninsured by 24 million in 10 years but reduce taxes by about $1 trillion, coming from items like taxes on medical devices to taxes on health savings accounts.

“If you do the $1 trillion cut in Obamacare taxes first, then when you do tax reform, you can raise $1 trillion less and be within the reconciliation package,” Norquist explained.

In other words, the starting point for the tax reform discussion is already disadvantaged, according to Norquist.

Nonetheless, Norquist said he’s not worried about Trump as a dealmaker.

“This is his first effort,” Norquist said. “He’s not buying a building. He’s trying to negotiate with several hundred people on a piece of legislation. So, it’s a completely different kettle of fish.”

Nicole Sinclair is markets correspondent for Yahoo Finance.

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