Friday, March 4, 2011

House Votes to Repeal 1099 Provision


WASHINGTON—The U.S. House of Representatives voted to repeal an unpopular tax-reporting requirement affecting small business owners, in what would be the first substantial change to the sweeping health-care package signed into law last year.

In a 314-112 vote, the House approved the measure, but the Senate is unlikely to take up the bill as it is currently drafted, adding further delay to the attempt at repealing the measure.

Seventy-six Democrats joined every single Republican lawmaker present in voting in favor of the repeal legislation, while 112 Democrats opposed it.

The so-called 1099 provision was included in last year's health-care law to partially pay for the cost of the changes included in the package.

It required smaller business owners to provide an account to the Internal Revenue Service of far more of their business transactions. The goal was that more money owed in taxes would be tracked this way.

Official estimates stated it would raise around $18 billion a year, money that would be used toward the cost of implementing the health-care law.

But business groups and firm owners quickly attacked the measure, saying the onerous requirements it placed on smaller firms far outweighed any benefit to the Treasury.

Republicans said it would require small-business owners to spend more on tax preparation, rather than invest in their companies and hire new workers.

"The 1099 mandate has been a major source of uncertainty for small businesses trying to grapple with the costs and consequences of the government takeover of health care," said House Speaker John Boehner (R., Ohio) after the vote.

Congressional Democrats and President Barack Obama agreed, and pointed to efforts to repeal the measure as evidence they were willing to work with Republicans to change their controversial health-care law.

A similar bill passed through the Senate last month, but rather than being a stand-alone piece of legislation, it was attached to a wider overhaul of the regulation of the aviation industry.

Due to that, and because House Republican leaders wanted to change how the revenue lost from repealing the provision would be accounted for, they brought forward their own version of repeal legislation.

Under the House-passed measure, relief from the tax reporting requirement would be expanded to some owners of rental property. Their legislation would direct the federal government to more aggressively go after subsidy overpayments to people to help afford the cost of health-care insurance.

It would collect around $20 billion, meaning the net effect of the legislation would actually reduce the deficit by just under $200 million.

The Senate-passed measure simply instructed the White House Budget Office to find the savings in unspent federal money.

Because of the impact this change could have on the wider health-care law implementation, Senate Democrats are unlikely to take up the House version of the repeal.

The fight over the 1099 repeal is illustrative of the power struggle between House Republicans and Senate Democrats this year. While both sides agree the measure should be scrapped, neither party wants to be seen to give the other side an easy political victory.

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