Wednesday, December 22, 2010

1099 May Take Down the Health Care Overhaul

Disclaimer: In an effort to garner some personal excitement in my day job at a political organization, I will be discussing politics today. This may or may not be a trend. 
But here's some flowers I painted that are much more blog-worthy:

The 1099 Tax Reporting Requirement. Unless you own a small business, it is unlikely this keeps you up at night. This unpopular provision would reportedly raise $19.1 billion to fund the Health Care Law passed earlier this year. (Yes, this post will be about a tax law, beyond interesting.) The 1099 requirement is set to go into effect in 2012. Under this reporting requirement, businesses must file a 1099 form with the Internal Revenue Service identifying any expenses of $600 or more with a vendor, supplier or contractor.

"We have a year and a half to fix 1099. We have no more time to fix small businesses," said Senate Small Business Chairwoman Mary Landrieu (D-LA).

Democrats and Republicans identify the burden this provision places on businesses, particularly small business, but little can compete with the $19.1 billion generated by added tax payments to help pay for the new health care coverage. Many Republicans, and possibly Democrats, identify that a fight over the 1099 tax requirement will ignite efforts to slowly unravel the health care law.

"We are going to do it a little bit at a time until we can repeal the whole thing and start all over," said Sen. Kay Bailey Hutchison (R-TX).

This elusive provision may be the stilt bracing the health care overhaul, and it may also be the first attack of the Republicans in the new Congress. Repealing the health care overhaul was a Republican rallying cry during the mid-term elections, but with Obama's veto power and the Democrat-controlled Senate, the goal faces many hurdles. The administration is moving quickly to implement the law, which makes a repeal increasingly difficult and expensive. But, without the 1099 tax reporting requirement, the health care law becomes difficult to justify in the budget.
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