House trims tax rule from health care law
Measure to aid small businesses
WASHINGTON – The House of Representatives on Thursday sliced a little bit out of the health care law, with Democrats joining Republicans in the bid to ease business burdens.
Amid some partisan flare-ups, the House voted 314-112 to repeal an expanded tax-reporting requirement imposed under the health care law last year. The provision primarily affects small businesses.
The bill removes the requirement that businesses file so-called 1099 forms with the Internal Revenue Service for every corporate transaction that totals more than $600. The intention of the expanded filing requirement was to help the IRS ensure tax compliance.
The bill restores the requirement that businesses file 1099 forms only for transactions with non-corporate entities, such as independent contractors.
While relatively modest, Rep. Dan Lungren’s could become the first successful effort to scale back any part of the health care legislation that was approved over Republican opposition last year.
“This is an indication of the kinds of things you’ll find in the health care reform bill,” Lungren, R-Calif., said.
The House bill passed Thursday with the support of every voting Republican and 76 Democrats. A similar measure previously passed the Senate with bipartisan ease. Now the House and Senate must reconcile differences in the bills.
Lungren’s bill still incites Capitol Hill conflict, even though every lawmaker seems to agree with its goal. The biggest problem is how to pay for it.
Repealing the small-business tax-reporting requirement would cost the federal government about $21 billion in lost tax revenues over the next 10 years, according to the Congressional Budget Office. The bill offsets this by reducing certain health insurance subsidies.
“There is widespread agreement that the 1099 reporting requirement needs revision. So what’s the hang-up?” said Rep. Henry Waxman, D-Calif. “The hang-up is the Republicans want to pay for this tax cut on the backs of lower-income families.”
The Obama administration, in its formal statement of position, declared this week that it “strongly supports” repealing the tax-reporting provision but it also raised “serious concerns” about how the cost is offset.
Lungren first introduced his bill last April. At the time, he faced resistance from both sides of the aisle.
Some Republican leaders feared that the measure would distract from the higher-profile but long-shot proposal to repeal the entire health care law. Democratic leaders, too, were trying to steer their rank-and-file members away from the GOP-authored measure; a review of House records shows that Democrats began signing on as co-sponsors only this year.