Senate Votes to Dump 1099 Mandate

By February 3, 2011General

Even though the Senate voted on party lines Wednesday to retain the 2011 Patient Protection and Affordable Care Act, a large bipartisan majority voted 81-17 to end the 1099 reporting requirement that had employers up in arms. Intended as a revenue generating measure, the provision would have required businesses to file 1099 tax forms on any transactions with suppliers that exceeded $600 in a year. Paperwork nightmare would be too kind of a description.

In the 111th Congress, Sen. Mike Johanns (R-NE) led the fight to kill the measure, arguing that any revenue shortfall that resulted could be made up by reallocating funds that the federal government had yet to appropriate. Senate Democratic leadership instead wanted to raise taxes on companies with foreign earnings or oil company revenues.

Sen. Debbie Stabenow (D-MI) sponsored yesterday’s amendment to end the 1099 reporting requirement, but it’s Johanns’ arguments that carried the day. From

[The] Senate’s decision to tap unspent money to pay for the cost of 1099 repeal makes it much more likely to be agreed to by the House, which already passed total repeal of health care reform. Business groups hope 1099 repeal is enacted quickly because businesses would need time to change their accounting systems if the requirement does go into effect next year.

Business groups opposed the tax increases in the Democratic amendment, contending raising taxes on oil companies would increase energy costs.

“This amendment will cost good-paying manufacturing jobs,” said Aric Newhouse, senior vice president at the National Association of Manufacturers. “Discriminatory tax policies that pick ‘winners’ and ‘losers’ and pit industry sectors against each other undermine U.S. competitiveness, innovation and job growth.”

The Senate vote Wednesday not only ends a horrible, anti-competitive tax provision, it also demonstrates that the 2010 health care law is not sacrosanct. Whether bit by bit or in one fell swoop, the ill-conceived and badly structured law can be repealed. After that, Congress can start again and get it right.

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