Editore"s Note
Tilting at Windmills

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September 13, 2010

MIKE JOHANNS AND THE '1099 PROBLEM'.... The story of the day in health care circles is a renewed focus on what some have labeled the "1099 problem" -- and a proposed "fix."

The Affordable Care Act included a provision that requires expanded 1099 reporting for businesses. The loophole-closing move has traditionally enjoyed bipartisan support -- the idea is predicated on the notion that more reporting will reduce fraud and improve tax revenues -- but after health care reform became law, the "1099 problem" became a favorite GOP talking point. By forcing businesses to report more transactions to the IRS, the argument goes, the law is causing burdensome headaches throughout the private sector.

Enter Sen. Mike Johanns (R) of Nebraska. The conservative senator, with quite a bit of backing, wants to ease the tax rules, even if it would make it easier for businesses to skirt tax laws.

Don't worry, Johanns responds, we can pay for expanded loopholes that encourage fraud by all but eliminating the Prevention and Public Health Fund included in the law. In other words, Johanns wants to make it easier for businesses to cheat on their taxes by taking money away from prevention programs.

Matthew L. Myers, head of the Campaign for Tobacco-Free Kids, explained last week, "This shortsighted tradeoff would continue a nonsensical system in which we spend billions treating debilitating diseases that we know how to prevent, while shortchanging the proven services that prevent these illnesses in the first place. It would chip away one cornerstone of a new health care system that is intended to be less costly, more rational and lead us toward a healthier society."

I can appreciate why the 1099 issue has been deemed problematic, and I'm not unsympathetic to businesses that resent the additional bureaucracy. But (a) tax evasion really has been a serious issue; (b) there are better ways to address the problem; and (c) Johanns is talking about gutting funds for HIV prevention, cancer screening, and flu vaccinations. Republicans tend to be backwards on health care policy, but this is kind of crazy, even for them.

Harold Pollack had a terrific item on this yesterday.

Tighter tax requirements on small business prevent some firms from committing tax evasion, and it imposes some costs and bother on law-abiding firms which now have to fill out some more paperwork and presumably update their Quicken software. Senator Johanns believes that it's so vitally important to loosen these requirements that he would make up the lost revenue by slashing federal funding for critical public health efforts -- efforts that are already taking some tough hits because of the state and local budget crisis.

Senator Johanns' amendment will be debated September 14. Florida Senator Nelson proposes a saner alternative that would raise the 1099 reporting threshold to $5,000 and would exempt firms with fewer than 25 employees. Nelson would finance this measure by reducing tax breaks for large oil companies rather than by zeroing out important public health measures. You might think NFIB would welcome this reasonable fix. No dice.

Odds are, Johanns' push will come up short this week. But this is nevertheless a sign of where the policy debate is headed after the midterms -- when Republicans aren't working to shut down the government over health care, they'll be pushing measures like these.

For more, check out this Kaiser Health News item, as well as this report from the Center on Budget and Policy Priorities, which explains quite clearly why Johanns' measure would "raise premiums, increase the ranks of the uninsured, and eliminate preventive health funding."

Steve Benen 10:45 AM Permalink | Trackbacks | Comments (9)

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Comments

I am not that sympathetic to businesses.

Providing health insurance to employees used to be a nice perk. Now it is a massive headache that only makes U.S. companies less competitive. They don't want to file 1099s? I'm not surprised. Why they would want to do anything that is unrelated to their core businesses is beyond me.

The HCR negotiations presented American businesses with a tremendous opportunity to, once and for all, decouple employment and health insurance. Instead of seizing the opportunity and supporting single-payer, Medicare-for-all, or a real public option, businesses largely punted and let both partisans in corporate boardrooms and ideologues at the Chamber of Commerce represent their interests. As it turns out, they were very poorly served.

Posted by: square1 on September 13, 2010 at 11:22 AM | PERMALINK

Once again, the Republicans pine for the '90's.

-the 1890's. . .

Posted by: DAY on September 13, 2010 at 11:22 AM | PERMALINK

Is there really no way to eliminate the comment spam? I don't see other blogs having this much of a problem with it.

Posted by: square1 on September 13, 2010 at 11:23 AM | PERMALINK

"The Democrats’ measure would raise the threshold for reporting goods purchased to $5,000 from $600 and would exempt businesses with 25 or fewer employees from the requirement altogether. It also excludes purchases made by credit card, because these will be reported separately by credit card payment processors under a different law that takes effect in January. These revisions, according to a Finance Committee aide, would likely cost the Treasury $10.1 billion in lost revenue."
http://boss.blogs.nytimes.com/2010/08/09/will-congress-ease-1099-requirements-in-health-care-bill/?src=busln

Posted by: anontoo on September 13, 2010 at 11:38 AM | PERMALINK

YES! While they use computers to raise funds, connect to the internet, and balance their books Republicans still like to pretend businesses still use the same accounting and bookkeeping methods as Scrooge and Marley, good Republicans both.

One can imagine the Scrooge screaming about taxes and demanding to repeal the Affordable Health Care Act. "Are the emergency rooms closed?"
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yep real nice folks those Republicans....

Posted by: KurtRex1453 on September 13, 2010 at 12:25 PM | PERMALINK

square1 hit it on the head. btw the u.s. chamber doesn't give a damn about small businesses as long as their money continues to flow into tom donahue's pockets via local chambers.

Posted by: mudwall jackson on September 13, 2010 at 2:22 PM | PERMALINK

This is kickback kornhusker Ben Nelson's state isn't it? B.Nelson takes his thinking from people like Johanns. Anything to ensure money in the politicians pocketbook and voter be damned.

Posted by: MLJohnston on September 13, 2010 at 3:25 PM | PERMALINK

A bit off the point, but regarding corporate taxes ... Since corporations are now "legal persons" perhaps they should be taxed at the individual income tax rates ?

Posted by: justsomeguy on September 13, 2010 at 3:32 PM | PERMALINK

Anyone earning a living as a self-employed person has a 1099 filed for any income of $400 or more. What's so exceptional about requiring business to report other businesses who earn $600? This is just pandering to business tax evasion. Quicken can take care of this quite expeditiously.

Posted by: Robert Abbott on September 13, 2010 at 4:28 PM | PERMALINK




 

 

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