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Tuesday, September 14, 2010

Repealing ObamaCare measure by measure

Today is the first day when the Senate will have an actual chance to vote on repealing a measure from ObamaCare. At stake is the ridiculous provision slipped into the bill that would require all businesses to submit 1099 reports for any business-to-business transactions that amount to over $600 in a year. Supposedly, this will raise $17.1 billion and help offset the mammoth costs of ObamaCare. The WSJ explains why this is both pernicious and absurd.
But this "tax gap" of unreported business income is largely a Beltway myth, and no less than the Treasury Department's National Taxpayer Advocate Nina Olson says the costs will be "disproportionate as compared with any resulting improvements in tax compliance."

Meanwhile, small businesses are staring in horror toward 2013, when the 1099 mandate will hit more than 30 million of them. Currently businesses only have to tell the IRS the value of services they purchase from vendors and the like. Under the new rules, they'll have to report the value of goods and merchandise they purchase as well, adding vast accounting and paperwork costs.

Think about a midsized trucking company. The back office would have to collect hundreds of thousands of receipts from every gas station where its drivers filled up and figure out where it spent more than $600 that year. Then it would also need to match those payments to the stations' corporate parents.
This is what happens when a mammoth bill is rushed through without proper vetting and hearings. Democrats want to claim that they didn't know or understand about this provision and they would have never, ever wanted to burden small businesses in this way. They all want to seem like they're the protectors of big business. If that were so, they would have paid more attention to what they were voting for.

The White House supports an amendment by Bill Nelson that would range the 1099 threshold to $5,000 and exempt businesses with fewer than 25 workers. Way to push an incentive to businesses to limit how many employees they hire.
Businesses would still have to track all purchases, not knowing in advance which contractors will exceed $5,000 at the end of the year. It also creates a marginal barrier to job creation—for a smaller firm, hiring a 26th employee would be extremely costly. The Nelson amendment also includes new taxes on domestic oil production, as every Democratic bill now seems to do.
Republicans want to excise the measure entirely. We'll see how many Democrats are just interested in the face-saving vote rather than truly rescinding a stupid and harmful provision. The White House fears that allowing this measure to be repealed will be but the beginning of a trend to repeal unpopular aspects of their unpopular bill. May it be so.


Freeven said...

A few thoughts:

1) Pelosi meant it when she said we have to pass ObamaCare in order find out what's in it.

2) What is a tax increase on small businesses doing in a health care bill to begin with?

3) What happened to Obama's promise not to raise taxes on 95% of Americans?

4) If Obamacare was supposed to make health care cheaper, why was it necessary to increase taxes to pay for it from the onset?

5) Even Democrats overwhelmingly admit this is a bad provision, yet both Obama and Pelosi still don't want it repealed. He for political reasons, and she because she lives on Planet Pelosi. They should both pay a heavy political price for this.

6) "Democrats now claim they were blindsided" (by Pelosi, no less, who rigged the vote) and "had no idea what they were voting on." They too should pay a heavy political price.

7) Just about everyone agrees that the original provision is absurd, imposing "vast accounting and paperwork costs" on small businesses which are "disproportionate as compared with any resulting improvements." If this is so, how is the Nelson amendment -- which imposes those same burdens, just using different limits -- any less absurd?

Freeven said...

I forgot to mention, Betsy, that you omitted a link to the WSJ article.