Americans for Tax Reform is opposed to a bill the U.S. House will consider this morning which repeals the expanded 1099-MISC information reporting requirements for small businesses contained in the Obamacare law. While ATR supports repeal of this provision, we don’t believe that replacing one bad tax with thirteen new tax increases makes any sense. The onerous “Obamacare small business paperwork tax” should simply be repealed without any further income tax hikes. ATR may keyvote AGAINST passage of 1099 reporting repeal unless the tax hikes are stripped out.
One of the two dozen tax hikes in Obamacare creates a new and onerous paperwork burden for small businesses which JCT projected would raise small business taxes by $17 billion over the next decade. Businesses will be forced to issue paper-filed “1099-MISC” IRS information reporting forms to any person or company with which they purchase at least $600 in services or goods. This will create the need, for example, for a small business owner to collect tax information and issue tax forms to his favorite restaurant for business meetings, the local office supply store, his airline, his rental car company, the cleaning service in his office—the list would be nearly interminable for millions of smaller employers with tight margins.
This provision has faced a firestorm of opposition both inside and outside the Beltway. Feeling the heat on this, Congressional Democrat leaders want to repeal this highly-unpopular new tax on small business employers. However, in bowing to public opposition to their new tax, they are “paying for” this action by raising no fewer than thirteen other taxes, mostly on large U.S. employers doing business overseas. By raising taxes on these companies, it makes it more likely that jobs and even entire companies will have to be shipped overseas.
The Obamacare small business paperwork tax was a mistake that never should have been passed into law in the first place. Its repeal—without additional tax hikes—is the least that Congressional Democrats can do for America’s small employers.