Alarming News

March 3, 2011

The NRCC sends out a cool, hip press release?

It’s true. The headline paraphrases Jay-Z’s “99 Problems”: Small Businesses Got “1099” Problems, and Democrats Are One.

I can’t believe it either.

For reasons unclear to me, the NRCC doesn’t have the coolest press release they’ve ever put out on their website so I’ll reprint it here:

Small Businesses Got “1099” Problems, and Democrats Are One

As House GOP Prepares To Repeal Burdensome Employer Regulations, Democrats Dig In to Defend ObamaCare

House Republicans will today vote to repeal 1099 reporting requirements passed under ObamaCare in response to extensive complaints from small business owners about how the new rules would cause a “compliance nightmare”:

“Business advocates fear it could generate a flood of paperwork. While the provision affects all companies, small businesses will be slammed the hardest because they often lack the compliance departments and legions of accountants that corporations retain on staff…

“Spend $600 on cell-phone service, at FedEx, or fueling up at the local gas station? Better get their tax ID number. Buy new computers? File a 1099. “It’s going to be a compliance nightmare,” says Rob Seltzer, an accountant in Beverly Hills, Calif. He figures he would go from filing two 1099s to 15.

“Seltzer is on the low end. The IRS says about 85 million 1099-MISC forms are filed each year, and that could jump significantly under the new law. The National Small Business Assn. estimates that the average company will have to file 95 of the forms under the measure, up from fewer than 20 today.” (John Tozzi, “Health-Care Bill Surprise: 1099 Nightmare,” Business Week, 5/27/2010)

“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.” (Editorial Board, “Review & Outlook: The 1099 Insurrection,” The Wall Street Journal, 9/15/2010)

President Obama has pledged repeatedly that he would undo unnecessary regulations, and the 1099 provision seems a perfect opportunity to test his seriousness:

“I’ve ordered a government-wide review, and if there are rules on the books that are needlessly stifling job creation and economic growth, we will fix them.” (“Obama’s Remarks at the Chamber of Commerce,” The New York Times, 2/7/2011)

“This order requires that federal agencies ensure that regulations protect our safety, health and environment while promoting economic growth. And it orders a government-wide review of the rules already on the books to remove outdated regulations that stifle job creation and make our economy less competitive. It’s a review that will help bring order to regulations that have become a patchwork of overlapping rules, the result of tinkering by administrations and legislators of both parties and the influence of special interests in Washington over decades.” (Barack Obama, “Toward a 21st-Century Regulatory System, The Wall Street Journal, 1/18/2011)

But rather than repealing the job-destroying regulation they created, Obama and many Democrats are doubling down on their defense of ObamaCare at the expense of small businesses, and reaching for questionable justifications for why the 1099 provision must be retained:

OBAMA: “‘The administration strongly opposes the House’s offset to pay for this repeal, which would undo an improvement enacted with nearly unanimous support in the Medicare and Medicaid Extenders Act that eliminated an egregious ‘cliff’ in the tax system affecting middle income taxpayers,’ according to Statement of Administration Policy released Tuesday night.” (Vicki Needham, “White House Backs 1099 Repeal, Concerned About How To Pay For It,” The Hill, 3/1/2011)

REP. JOE CROWLEY (D-NY): “Congressional Democrats argue that such a measure constitutes a massive tax increase for taxpayers who did not intend to defraud the government. Rep. Joseph Crowley, D-N.Y., argued that the measure unfairly penalizes millions of workers with hourly jobs whose hours are not set and do not receive employer-paid health care.” (Kelsey Snell, “New House Version of 1099 Repeal Loses Dem Support,” National Journal, 3/2/2011)

Earlier this week, Democrats signaled they might even shift their war on small business to a new front, as Treasury Secretary Tim Geithner floated the idea of taxing small businesses as corporations and doing away with the partnership as a business tax structure:

“U.S. Treasury Secretary Timothy Geithner told the Senate Finance Committee Feb. 15 that Congress should ‘revisit’ long- standing rules that give businesses a choice of paying taxes as a corporation or through a structure such as a partnership through which they can report business income on individual tax returns.

“The recommendation, which Geithner repeated in a meeting with reporters this week at Bloomberg News in Washington, would affect income earned by the nation’s largest law firms, investment partnerships and so-called S corporations. It would more than double, to about $3 trillion, the amount of business income potentially affected by tax-law changes.” (Ryan J. Donmoyer, “Geithner Says Tax Overhaul Must Address Businesses Filing as Individuals,” Bloomberg, 2/25/2011)

Democrats continue to be all talk and no action when it comes to reducing burdens on small businesses. After only three Democrats joined Republicans in voting to repeal ObamaCare, it’s little surprise that Democrats are digging in to defend their job-destroying government takeover of healthcare:

ONLY 3 DEMS JOIN GOP ON OBAMACARE REPEAL: Final Vote: 245-189 (House Vote #14, 1/19/2011)

Posted by Karol at 01:10 PM |
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