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House votes for repeal of health act’s tax rule

End of reporting requirement for business wins bi-partisan support, but arguments flare.

Barletta

Marino

WASHINGTON — The House of Representatives on Thursday sliced a little bit out of the big health care law, with Democrats joining Republicans in the bid to ease business burdens.

Amid some partisan and interpersonal 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 purpose of our bill is to help employers do what they do best," said Rep. Dan Lungren, R-Calif. "Plain and simple, they create jobs."

Republican Reps. Lou Barletta of Hazleton and Tom Marino of Lycoming Township joined all other House Republicans and a number of Democrats in voting to repeal the 1099 provision. Barletta said in an interview in his Capitol Hill office that as a former small-business owner – a pavement marking company – he knew the first time he heard about the requirement that it was a bad idea.

“It was an onerous regulation intended to trip up small businesses,” he said.

Marino drove back to his district after the vote to hold a news conference in Lewisburg, along with the owner of Lewisburg Builders Supply Co., to talk about why he thought it was important to repeal the provision.

“It would have created a tremendous burden on more than 40 million entities including governments, nonprofits and businesses, small and large,” Marino said.

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, Lungren’s bill could become the first successful effort to scale back any part of the 384,000-word 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 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.

Even so, the House debate Wednesday and Thursday resurrected many of the tensions and talking points that had dominated earlier health care discussions.

All debate halted for about 15 minutes when Lungren formally objected to how Rep. Earl Blumenauer, D-Ore., characterized Republican views. Lungren accused Blumenauer of calling him a liar; Blumenauer subsequently said he was misunderstood.

The generally mild-mannered, bow-tied Blumenauer eventually withdrew his comments, faced with potential parliamentary sanctions of being kicked off the House floor and having his "words taken down."

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.

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, Lungren noted Thursday. 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.

"It was slow going in the early days, I will say that," Lungren said. "This has been somewhat of a long journey."

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