Category

Taking It for Granted

After Telling Small Business To Embrace the IRS Paperwork

By | Economy, Health Care, Taking It for Granted | One Comment

The Senate on Wednesday told business owners to spend their money on IRS paperwork instead of hiring employees when it rejected the Johanns amendment to repeal Section 9006 of the new health care law, which requires that businesses track and report any dealings with vendors that exceed $600 by filing an IRS Form 1099.

The Senate then invoked cloture on the small business finance bill, H.R.5297, Small Business Jobs and Credit Act.

Senate Majority Leader Reid commented: “This is an important piece of legislation. It is the most significant thing we have done since the stimulus bill was passed to create jobs.”

Sen. Mary Landrieu, Chairman of the Senate Small Business Committee, said she was introducing a bill to repeal Section 9006 with different “pay fors” than proposed in the Johanns amendment.

We are going to repeal I am going to file a bill right now to take care of it. We are going to repeal
1099. We are not only going to repeal the portion that was put in by health care–which was not done intentionally, but there are sometimes unintended consequences. Anybody around here who thinks they can write perfect pieces of legislation–they cannot. When you do something wrong, you should correct it. We are going to correct it.

But in addition, my bill that I am going to file right now is going to repeal the $600 requirement that has been in the law for 62 years, and we are going to raise that threshold to $5,000, clean up the way small businesses have to report, and do something good for small business in America. …[snip]

I have heard small businesses in my State, and I know we made a mistake on this 1099 and we are going to fix it. But it does not have to be fixed this morning. It doesn’t even go into effect for a year and a half.

Goodness knows small business reporting could stand a good clean up, but with respect — uncertainty. UNCERTAINTY! Businesses considering expansion or new hiring can gain no confidence about their future costs from a Congress that may or may not take up the issue sometime in the future, possibly. The IRS reporting requirement hangs like the Sword of Damocles over small business.

Sen. Landrieu’s new bill is S. 3777, to amend the Internal Revenue Code of 1986 to increase the threshold amount subject to information reporting at source. The text is not yet available.

Penalizing U.S.-based Corporations is No Cure for Anything

By | Health Care, Taking It for Granted | No Comments

The National Association of Manufacturers is active in a broad-based coalition, PACE, which stands for Promote America’s Competitive Edge, which includes major U.S. businesses with international operations. Among the revenue provisions being considered to pay for an expansion of health care coverage are dramatically higher taxes on those corporations for earnings made overseas. The tax hikes would be extremely damaging to U.S. competitiveness.

A PACE letter signed by 280 companies and associations has just been sent to members of Congress, outlining the deletrious impact. Excerpt:

American companies with worldwide operations directly employ 22 million American workers and support an additional 41 million U.S. jobs through their supply chain and through the purchases of goods and services by their employees. A steep corporate tax hike on worldwide American companies, especially during a severe recession, will hinder our ability to protect and create American jobs and will slow our nation’s economic recovery.

The current U.S. international tax system has evolved over decades in a manner that attempts to keep worldwide American companies on a nearly level playing field with competitors in other nations. Meanwhile, other leading economies are moving to make their corporate tax systems more competitive. As a result, the United States lags behind and is increasingly isolated from the rest of the world.

The U.S. business community supports closing tax loopholes and prosecuting those who cheat on their taxes. However, the current international tax rules including deferral, check the box and foreign tax credits are fundamental tax provisions, and are integral parts of the US tax system – not “tax loopholes.” It is inaccurate and misleading to represent them as such.

That’s right. And politicians who decry “tax incentives for shipping American jobs overseas” are engaged in cynical populism.

The letter is a very clear introduction to the dynamics of international taxation and U.S. competitiveness. Highly recommended.

And here’s the news release.