Washington, DC -- Congressman Eliot Engel (D-NY-17) complained that the Republicans were again taking from the poor to help the rich, and using legislation he cosponsored to do it. The legislation was meant to relieve businesses of an onerous paperwork requirement required by the health care bill passed last year. The Democrats tried to pass similar legislation last year, but solid Republican opposition killed the bill. This year when the Democrats tried again, the GOP added an amendment that would make up for the loss of revenue by passing the costs on to low-income families.

“The Republicans took a good bipartisan idea and made it a partisan issue. They chose to eliminate protections for families with incomes between 400-500 percent of poverty – which equates to $88,000-$110,000 for a family of four.  This means these families may wind up paying the IRS the entire value of their health insurance premium tax credits.  This will actually lead to an increase in the number of uninsured, according to the Joint Committee on Taxation, completely defeating one of the main purposes of the Affordable Care Act,” said Rep. Engel, a senior member of the House Energy and Commerce Committee’s Subcommittee on Health.

“The GOP has decided to penalize lower-income families and small businesses while continuing to support tax cuts for the super-wealthy and tax breaks for Big Oil companies. They continue to bang the drum to balance the budget, except they intend to do it on the backs of the lower- and middle-classes, teachers, and first responders, and now, small businesses.  I believe they really need to sort out their priorities and start to work on behalf of the American people, rather than on behalf of special interests,” added Rep. Engel.

The bill, the Small Business Paperwork Elimination Act (HR 4), seeks to offset the $21.9 billion in budget deficits over the next 10 years, known as 1099 filing requirements, by making Americans who receive health care tax credits repay them should they increase their income through a better job or overtime over the course of a year.  It modifies the Affordable Care Act's repayment schedule impacting Americans who, due to changes in income over the course of the year, need to repay a portion of the health care tax credits they have received. This legislation would further modify these protections and increase taxes for many middle class American families.

For example, if you are a family of four, earning $88,000 a year (398% of the federal poverty level) - with two parents, each earning $44,000 – the health care law caps the amount of premiums they would be forced to pay annually at 9.5% of their income.   So the family receiving health insurance would pay $8,360 in annual premiums, and the Federal government would provide a tax credit valued at $4,640. 

If this family gets a $250 Christmas bonus, they would go to 401% of the federal poverty level, and under the Republican bill, this family would be required to refund to the IRS the entire tax credit of $4,640 -- out of their own pockets.  

An estimated quarter of million individuals will no longer receive health insurance out of fear that they will be forced to pay substantial amounts at tax-time.  These same families may wind up turning down a better job, or increased shifts at their current job, for fear that they may surpass the 400 percent mark and be subject to this egregious tax.

H.R. 4 would eliminate a requirement that would, beginning in 2012, expand the scope of transactions businesses must report to the IRS to include payments to other businesses for goods and services in excess of $600 per year. Known as the "1099 reporting requirement," the Joint Committee on Taxation estimated repeal of this requirement would increase budget deficits by $21.9 billion over the 10 year window of 2011-2021. In the last Congress, House Democrats offered fully offset legislation to repeal the 1099 reporting requirement, which did not pass due to virtually unanimous Republican opposition.

“I believe that the 1099 filing requirement was a perfect example of how we could work together on behalf of the American people.  I am disappointed, but not surprised, that the Majority continues to escalate the political divide by pushing their agenda.  They are apparently not interested in helping the economy or creating jobs,” added Rep. Engel.

###