Amendments to ease health care 1099 reporting die partisan death

seal of the us senate

Amendments to the 1099 rule of health care reform didn't survive in the Senate, where partisan warfare is more important than good policy. Image:Wikimedia Commons

The health care bill that passed in July had an obscure provision about 1099 forms. Health care 1099 reporting isn’t obscure anymore. To raise money for health care reform, the 1099 rule aims to cut down on tax evasion. The business community says the extra paperwork will put undue strain on small companies and kill jobs. Democrats proposed loosening the 1099 rule and making up for money lost by cutting gas and oil subsidies. Republicans proposed repealing health care 1099 changes altogether, and gutting health care prevention programs to make up the difference. Neither proposal passed a Senate vote Tuesday. The 1099 requirement remains in place. Nobody wins. Welcome to the U.S. Senate.

The 1099 rule

The 1099 rule of health care reform is a tax-reporting requirement to help pay for coverage of the uninsured. The New York Times reports that congressional tax experts said the 1099 rule would generate $17 billion in the next 10 years. Health care reform requires filing 1099s for more situations. Businesses must file 1099s identifying anyone they pay $600 or more. Health care 1099 reporting is now required not just for services, but for goods or merchandise as well. Businesses will also have to send 1099s to their vendors, suppliers and contractors. Those purchases currently go unreported, and taxes related to them often go unpaid. Business groups say it would create a paperwork nightmare as companies struggle in a weak economy.

1099 rule alternatives

To alleviate the health care reform 1099 requirement, The New Republic reports that Florida Democrat Bill Nelson proposed an exemption for small businesses with 25 workers or less. Nelson’s proposal would also raise the reporting threshold from $600 to $5,000 for all businesses. The lost revenue would be recovered by cutting government oil and gas subsidies to energy companies. Nebraska Republican Mike Johanns proposed getting rid of  health care 1099 changes altogether. To pay for it, Johanns wants to eliminate the Prevention and Public Health Trust Fund, which provides money for programs like HIV prevention, cancer screening and flu vaccination.

You were expecting results?

Both amendments to reform the 1099 reporting requirements in the health care bill failed Tuesday. Ezra Klein at the Washington Post reports that in the Senate vote, Nelson got 56 votes–a majority. But since he didn’t get 60 votes, those 56 votes were worth nothing. Johanns got 46 votes. Klein points out that most Democrats weren’t willing to weaken public health. Republicans weren’t willing to cut oil and gas subsidies to free small business owners from what they call a “job-killer.” He also adds that as long as the Senate insists on super-majorities to pass anything, party-line voting is more important than making good policy.

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