THE 1099 REPEAL FIASCO

  • The Wall Street Journal
    • AUGUST 7, 2010

    Democrats Against ObamaCare

    The 1099 repeal fiasco, and the Snooki tax.

    • This wasn’t a good week for ObamaCare, with Missouri voting to repeal the law and a Virginia judge refusing to dismiss a serious Constitutional legal challenge. Unlikely as it sounds, however, the repeal movement even came to include House Democrats.

    To wit, the House voted last week to repeal one ObamaCare mandate. It might have been the first part of the bill to go over the side, except Democrats rigged the vote so that it failed, even though it got a majority.

    The target was an ObamaCare footnote that could wreak havoc with more than 30 million small businesses. In the name of smoking out the illusory “tax gap” of unreported business income, Democrats snuck in a requirement that companies track and submit to the IRS all business-to-business transactions exceeding $600 annually. This 1099 reporting detail received no scrutiny until the IRS’s National Taxpayer Advocate Nina Olson exposed the paperwork burden, which would produce no improvement in tax compliance.

    Just before the House left town for August, Dave Camp, the ranking Republican on the Ways and Means Committee, offered an amendment that would have rescinded these mandates; as a “motion to recommit,” it was guaranteed an up-or-down vote.

    Speaker Nancy Pelosi and wingman Sander Levin were terrified that rank-and-file Democrats would defect, so they pulled their entire bill and reintroduced it a few hours later, with the basic Camp language included. In other words, not only was the House leadership unwilling to defend the 1099 provision but it took the lead in rolling it back, if only to prevent an embarrassing floor spectacle. Democrats try to make stone soup out of ObamaCare’s unpopularity by claiming that voters support pieces of the bill, at least in isolation. Er, which pieces would those be?

    One catch: The bill was put on the House suspension calendar, meaning it needed a two-thirds majority to become law. In the end, the combined bill shook out 241 to 154, with 239 Democrats voting yea. Most Republicans who favor repealing the 1099 mandate voted no because the final product also included multiple new taxes. Thus Democrats can now say they voted to repeal the 1099 burden without in fact having repealed it.

    This is the first of many such moments as the public discovers ObamaCare’s many buried land mines. Another example got some attention last week thanks to Nicole “Snooki” Polizzi, one of the idiot savants on MTV’s “Jersey Shore.” The reality star complained on air that “I don’t go tanning-tanning [indoor tanning] anymore because Obama put a 10% tax on tanning, and I feel like he did that intentionally for us.” If you’ve lost Snooki, you’ve lost middle America.

    Democrats sprung this $2.7 billion excise tax on indoor tanning sessions in the final frantic weeks before ObamaCare passed. The 19,000 very low-margin “mom and pop” businesses that comprise the tanning industry don’t have much pull in D.C.

    This Snooki levy was the first direct ObamaCare tax hike to take effect—the IRS started to enforce it July 1—and like the 1099 mandate, the compliance burden is drastic. The IRS estimates that it takes 36 hours to complete Form 720, which must be filed quarterly. Tanning salons are now trying to reincorporate as gyms, health clubs or “phototherapists” that are exempt from the new tax.

    Democrats write all this and more off as “unintended consequences,” but tell that to the intended victims. The only way to fix ObamaCare is to get rid of it.

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