After hearing loud and clear from the American people that they reject the government takeover of health care, House Republicans plan to force a vote today on a measure to repeal ObamaCare’s job-killing small business mandate. This idea, which has been posted on AmericaSpeakingOut.com, would eliminate the burdensome, job-killing ‘1099 mandate’ in the health care law that requires employers and entrepreneurs to file a form for every total purchase of more than $600. The proposal, to be offered by House Ways & Means Committee Ranking Member Dave Camp (R-MI), will serve as the Republican motion-to-recommit on H.R. 5893.
Just as an up-or-down vote on the job-killing small business mandate will take place on the House floor, a separate debate on this idea is already underway at AmericaSpeakingOut.com. The idea has been posted here, and Americans are urged to follow the link, read the idea, vote on it, start a discussion, and share their ideas.
Following is a complete summary of the motion to recommit to be offered by Ways and Means Ranking Member Dave Camp (R-MI):
The Camp Motion to Recommit would strike the underlying bill and replace it with language fixing two of the many flaws in the recently enacted health overhaul. The Motion would repeal a burdensome, job-killing new reporting requirement on small businesses and would force those who receive erroneous overpayments of taxpayer-funded health insurance subsidies to pay back a larger share of those overpayments. These two changes are discussed more fully below.
Relative to the current law, the Motion to Recommit would reduce the deficit by $7.7 billion from 2010-2020 ($16 billion in reduced spending; $8.3 billion in lower tax receipts).
- I. ELIMINATING THE SMALL BUSINESS / 1099 REPORTING REQUIREMENT
The Motion to Recommit would repeal an onerous and job-killing reporting requirement contained in the Democrats’ health overhaul.
Beginning in 2012, small businesses will be required to file a 1099 form to the IRS for every business and individual to which they make total payments, for goods in services, of more than $600. This reporting requirement will drive up costs for small businesses because the number of tax forms they will have to file could quintuple. This added expense means employers will have less money to hire new workers and to retain existing ones.
The Internal Revenue Service’s own National Taxpayer Advocate highlighted several problems with this requirement in a recent report:
- “[T]he new reporting burden, particularly as it falls on small businesses, may turn out to be disproportionate as compared with any resulting improvement in tax compliance.”
- “[S]mall businesses may have to acquire new software or pay for additional accounting services, incurring additional costs.”
- “In our view, it is highly likely that the IRS will improperly assess penalties that it must abate later, after great expenditure of taxpayer and IRS time and effort.”
- “[S]mall businesses that lack the capacity to track customer purchases may lose customers, leaving the economy with more large national vendors and less local competition.”
The National Federation of Independent Business says this provision will have a “direct negative impact on small businesses.” And this week, the American Institute of Certified Public Accountants warned Congress this requirement “may prove to be so burdensome to small businesses that we believe it will significantly contribute to the hurdles to growth …. The AICPA strongly supports efforts to reduce the tax gap, but we believe the extraordinary burden in this instance far outweighs the potential benefit.”
The Joint Committee on Taxation estimates this provision will reduce revenues by $19.2 billion over the 2010-2020 period.
- II. RECOVERING HEALTH INSURANCE SUBSIDY OVERPAYMENTS
Beginning in 2014, the Democrats’ new health care law will provide taxpayer-funded subsidies to those under 400% of poverty who purchase coverage through the new Exchanges. The subsidy amount is based on prior year’s income. However, income levels may increase significantly during the course of the year (spouse returns to work, new job, pay raise, etc.). Moreover, the law allows individuals to allege their income has fallen in order to claim larger subsidies than their actual income would allow. Therefore, it is important to verify that, at the end of the year, no one received a larger subsidy than they were entitled to under the law.
Unfortunately, the Democrats’ overhaul doesn’t go far enough in this area to ensure taxpayer dollars are being spent appropriately.
Under the health care law, regardless of the amount of subsidy overpayment, most subsidy recipients whose actual incomes exceed their expected incomes only have to repay a small portion of the excess subsidy they received (maximum of $250 for singles and $400 for married couples with incomes under 400% of poverty). Failing to properly reconcile subsidy eligibility with actual income earned would leave other taxpayers paying larger than appropriate subsidies to these individuals and families, including those who may have committed fraud by understating what their income would be.
To better protect taxpayers, the Motion to Recommit would raise the maximum subsidy repayment amounts to $1,000 for individuals and $2,000 for families.
The Joint Committee on Taxation estimates that over the 2010-2020 period, this provision would reduce the deficit by $26.9 billion.
###
Tags: Press Release