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Friday, March 04, 2011

Onerous 1099 Health Care "Reform" Repealed By BiPartisan House

Whether you support or oppose health care reform, most will agree that its 1099 mandate, scheduled to start in 2012, would wreak havoc on most small businesses. Yesterday, a bipartisan House voted to repeal this requirement, 314 to 112, in what is called the Small Business Paperwork Mandate Elimination Act.

LV Congressman Charlie Dent, who had complained about this provision before the overhaul was enacted over a year ago, explained his vote supporting the repeal. “By forcing businesses to comply with needlessly burdensome tax filing requirements, the 1099 provision would ultimately divert limited resources and energy away from employers’ efforts to grow and innovate.”

In a news release, Dent's Congressional office reports that the The National Taxpayer Advocate, an independent entity operating within the auspices of the IRS, estimates 26 million non-farm sole proprietorships, four million S corporations, two million C corporations, three million partnerships, two million farming businesses, one million charities and other tax-exempt organizations, and likely more than 100,000 federal, state, and local government entities will be impacted by these new filing requirements.

“Unfortunately, the 1099 provision exemplifies many of the misguided elements included in the new law,” Dent explained. “It stands in the way of economic growth and job creation, while doing nothing to decrease the cost of health care in the United States.”

Dent was encouraged that 76 Democrats joined a unanimous GOP. “I hope the strong support for this bill among House Democrats signifies they are willing to admit provisions included in the hastily-drafted health care law will be detrimental to the American economy. I am prepared to work in a bipartisan manner to eliminate or modify additional impediments and enact effective health care reform.”

My only question is why would 112 House members want to keep this draconian provision?


Jon Geeting said...

I supported repealing it, but the reason you'd want to keep it (or some form of it) is because this is a haven for tax dodgers. We lose about $17 billion a year because of businesses not paying taxes on the purchases that the 1099 provision would cover. It's one of the pay-fors in the law and it reduces the deficit.

Your Dent bias is showing because you have never once acknowledged on this blog that Dent voted against repealing the 1099 provision because Democrats wanted to pay for it by eliminating corporate tax dodger havens in the Cayman Islands.

Jon Geeting said...

Another quick point - the only reason to want to repeal this is because it fails a pretty simple cost-benefit analysis: the inefficiencies it causes for business reduces their output, and ends up costing the government more than the revenue it brings in.

But that doesn't mean businesses shouldn't be paying these taxes! If there were an easier paperless way to monitor compliance, we should do that.

One of the advantages of a value-added tax is that the tax gets paid at each step in the production process, so it's easy to monitor. There's a built-in incentive for businesses to make sure that other businesses are paying their taxes.

Anonymous said...

"because Democrats wanted to pay for it ..."

It's an appalling sense of entitlement that supposes tax dollars confiscated by the government must be immediately replaced, or "paid" for. And the words flow effortlessly from the coveting class. Then, it's off to a new Federal taxing scheme that promotes ratting on each other to work effectively. Even Orwell couldn't have imagined how accurate he was when describing double-speak and Big Brother.

Donna Baver Rovito said...

Personally, I think that the Democrats who voted AGAINST repealing the ridiculous 1099 provision don't want to be seen as "weak" on the bill to their constituents. It would be interesting to see an analysis of their districts and the challenges any of them may face in 2012.