Senate Defeats Amendments To Strike Health Reform Tax Reporting Provision
The Senate failed Tuesday to change a tax provision in the health law that even the White House said was onerous for small businesses, The Associated Press reports. "Tucked into the health law is a requirement that businesses file tax forms called 1099s with the Internal Revenue Service for every vendor that sells them more than $600 in goods." Senators looked at two proposals to change it: a Democratic proposal introduced by Sen. Bill Nelson, D-Fla., would have raised the threshold to $5,000 and a proposal by Sen. Mike Johanns, R-Neb., would have repealed the reporting requirement altogether. Both failed.
"The votes were a sidelight in a debate over broader legislation to help small businesses, but nonetheless they underscored the difficulty of making any substantial changes to the health care law. Although majorities in both the House and Senate are now on record opposing the current 1099 reporting requirement, lawmakers disagree over whether to repeal or merely modify it, and how to plug a revenue gap that could be as large as $19 billion over ten years" (Alonso-Zaldivar, 9/14).
NPR: "Democrats, who in retrospect aren't very happy with the new paperwork requirements either, objected to the way Johanns wanted to make up the $19 billion hole that repealing the requirement would create in the health law." The GOP proposal would have "watered down the requirement that most people have health insurance, starting in the year 2014." Republicans were nonplussed by the Democratic proposal because they were reluctant to "let their opponents off the hook for something everyone agrees is highly unpopular" (Rovner, 9/14).
CQ Politics: "To pay for repealing the requirement, [Johanns] proposed generating $19.2 billion in revenue by limiting the reach of the individual health-insurance mandate in the new law and reducing funding allocated by the law for preventive-care programs." Democrats opposed both those ideas (9/14).
The New York Times explains how the 1099 measure in the current health law is expected to raise revenue. "The  forms are already widely used to report various kinds of payments of taxable income other than wages, like interest income or dividends. But the health care law requires filing the forms in many more instances than they were typically used before. The premise of the requirement was that businesses would be more likely to pay taxes on their income if they knew that the income was already being reported to the Internal Revenue Service by their business partners." Congressional tax experts said the requirement could generate $17 billion of additional revenue in the next 10 years. "The money would help pay for coverage of the uninsured" (Herszenhorn and Pear, 9/14).
The Hill: "The U.S. Chamber of Commerce and other business groups had lobbied furiously in favor of the Johanns amendment. Business groups argue the new requirements impose a heavy cost on small businesses and will harm the economy." Although neither plan passed, the votes cleared the way for a small-business bill that will offer $12 billion in tax cuts and create a $30 billion fund to support small business lending. Republicans had been seeking to block consideration of the bill, but Sen. George Voinovich, R-Ohio, agreed to advance the bill if the Senate could vote on Johann's amendment on the 1099 proposals (Bolton, 9/14).
The Wall Street Journal: The Obama administration says it would like to help ease the burden of the reporting requirement on small business. "Speaking to reporters after a press conference on Tuesday, Gene Sperling, who serves as a counselor to Treasury Secretary Timothy Geithner, said the administration is already working to address the concerns of small-business owners. 'We are willing to support legislative steps as well as long as they are fiscally responsible and are not attacking the integrity of the health-care bill,' Mr. Sperling said" (Boles and Vaughan, 9/14).
Los Angeles Times: Democrats argued that the Johanns proposal would "have cut funding for public health programs and exempted more people from having to buy health insurance starting in 2014, a key provision designed to control premiums for everyone." That option "worried many health experts and patient advocates who said it would have substantially weakened the healthcare law" (Levey, 9/14).
Kaiser Health News: This week's Health on the Hill includes a discussion of the Nelson and Johanns amendments (9/13).This is part of the KHN Morning Briefing, a summary of health policy coverage from major news organizations. Sign up for an email subscription.