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Describe the background of the law. Was it created by legislative action, administrative agency, or through a constituency vote?
Describe how this law will affect a health care organization. The main post should include at least 1 reference to research sources, and all sources should be cited using APA format.
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The primary purpose of the paper is to identify the new law that has been established in the United States and provide a relevant background of the law. It will also discuss its impact on healthcare organizations. Therefore, it will analyze the impact of the particular law within the healthcare organization.
Background of Tax Cuts and Jobs Act (2017)
The House of Representative and Senate Conference Committee has approved the Tax Cuts and Jobs Act on 15th December, 2017. The Act is created to facilitate settlement under the labels II and V of the simultaneous determination related to the fiscal year financial plan of 2018. It is determined to be a congressional revenue act of the United States that was introduced originally as Tax Cuts and Jobs Act (TCJA) (Gale, Gelfond, Krupkin, Mazur & Toder, 2018). The Act modified the Internal Revenue Code of 1986, simplified the tax code and widened the tax base. The Act was created to reform the income tax code of an individual by minimizing the rate of tax on business income, investment and wages. Based on the analysis, it can be seen that the act will help decrease the marginal tax rates on investment and labour that will increase the GDP rate by 1.7%.
The Act is approved to minimize healthcare subsidies by cutting net tax offsets, increase healthcare costs and decrease healthcare coverage. It is considered that the tax will increase health insurance premiums up to 10%. It will also increase the number of medical expenses by 10% and gross income up to 7.5% (Glied, 2018). As a result, the Act will change both commercial and individual income taxes and shift the U.S. into a provincial structure of business taxation.
Impact of the law in health care organization
The Act will create a great impact on non-profit and investor-owned healthcare organizations in the United States. It will help healthcare organizations to gain billions in repatriated funds and tax dollars. It brings new investment opportunities for the organizations, especially the benefits of tax reforms (Wiist, 2018). The newly established taxable fringe benefits can increase the rate of tax-exempt health systems and hospitals. Such healthcare system has to consider their corporate portfolios and structure based on the new tax environment. It will become necessary for them to determine the timing of gains and losses as the new law enables the organization to cut taxable income by 80% (Lalangas, Kroll & Carlson, 2018). The Act is made to minimize corporate tax rates of healthcare organizations by 20%, and employee compensation involves the repeal of $1 million reductions for performance and commission-based compensation.
One of its significant influence on the health care organization is the cancellation of the tax credits, especially for the clinical testing expenditure, for rare conditions or diseases or certain drugs. It will also affect the unrelated business taxable income, employee benefits and executive compensation within the healthcare organizations, including Redlands in the United States. With the help of this Act, the healthcare organizations in the U.S (Pierson, 2017). will be able to utilize the money to increase shareholder value, expand new collaborations and initiate acquisition activity and merger. The Act will mandate every individual under 65 in America to have health insurance or pay the fine.
The paper demonstrated an understanding of Tax Cuts and Jobs Act (2017) which creates an impact upon the healthcare organizations to a greater extent. It has been observed that this Act will create an impact on the taxable income, provisions as well as individual taxes of the healthcare system.
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