Congress considers repealing 1099 provision

Politico reports:

House Democrats proposed repealing a piece of the health care overhaul Friday, a move designed to thwart Republican efforts to do the same thing and declare an early victory in their efforts to repeal the whole law.

Democrats proposed repealing new IRS reporting requirements that small business has warned would be overly burdensome. But they attached a new tax on Americans conducting business overseas— essentially a poison pill for Republicans who are unlikely to support a new tax.

I wrote about the 1099 provision last May. The Politico article assumes that the Democrats are in earnest about this, and simply differ from Republicans over whether a tax increase ought to be attached to the repeal. But that might not be the right assumption. Politico notes that the Democrats came up with their own proposal only when the Republican proposal was on the verge of passage:

The bill gives Democrats cover for not supporting a similar amendment that Republicans had planned to propose Thursday evening. It also would have repealed the new reporting requirements but would have had different ways to pay for it. Democrats blocked the amendment from coming to the floor when it became clear that it could have passed.

The other way to read this is as an attempt to block the repeal. Somebody put that provision into the bill for a reason. What could be the reason for so costly and unnecessary a provision? A good theory is it was to be the first step toward a VAT.

We don’t have to guess at the Democrats’ intentions. They considered the repeal under a special rule that required two-thirds support. If they try again under normal order and pass it, we’ll know they were in earnest. If they never get around to it, we’ll know they weren’t.

(Via TaxProf.)

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