North Country Congressman Bill Owens has introduced another law to repeal an expense-reporting requirement in the national health care bill that critics say will be too burdensome on small businesses.
The federal government had expected $19 billion in revenue from the 1099 provision, which requires businesses to send the Internal Revenue Service a 1099 form for every business-to-business transaction of $600 or more. There is widespread agreement in Washington that it will be a burden on small businesses and should be repealed, but this hasn't happened due to disagreement on how to pay for the repeal.
A Democratic-supported measure that Owens, D-Plattsburgh, co-sponsored failed last year because it would have been paid for by increases in corporate and gift taxes. Owens' new bill, which he introduced Wednesday, would also be paid for by tax increases - a 5.4 percent surcharge on adjusted gross income of over $1 million yearly for joint filers and $800,000 for individual filers. Any revenue in excess of the repeal cost would be used to pay down the federal deficit and debt.
"The White House and Senate have been very clear (that) no bill without having a 'pay-for' in it is going to be considered," said Owens spokesman Sean Magers. "That was certainly one of the things that really has to be included in a piece of legislation."
The House of Representatives, however, now has a Republican majority that is likely to oppose any tax increases. Last year's repeal failed because Republicans voted against it, saying the funding should come from cuts elsewhere. Owens said in a press release that he hoped the bipartisan support for repeal "will allow us to address the issue quickly and provide small businesses the certainty they need to operate."
Magers compared the pay-for in the 1099 repeal bill to Owens' position on extending the Bush-era tax cuts. Owens ended up supporting the compromise that eventually passed, which preserved all the income tax cuts, but before that he had backed a compromise that would have allowed the tax cuts to expire on those making more than $1 million yearly, arguing this would affect less than 1 percent of the population of New York's 23rd Congressional District, which he represents.
"At the end of the day, it's shifting tax burden away from North Country small businesses and family farmers," Magers said.
Owens' bill had 13 co-sponsors, all Democrats, as of Wednesday afternoon. It has been referred to the House Ways and Means Committee.
California Republican Daniel Lungren has introduced two bills this year to repeal the requirement, neither of which say how it should be paid for. Owens and area Rep. Chris Gibson, R-Kinderhook, are among the 258 co-sponsors on the first one, and Gibson is one of 194 co-sponsors on the second.
"While (Owens) is on Mr. Lungren's bill, he believes if you're going to (add to the deficit), you have to make up for it in another way," Magers said. "That's something the new majority's been talking about, and that's pretty consistent with Bill's 1099 piece of legislation."
The 1099 requirement will take effect in 2012 if not repealed before then. It was included to raise revenue by reducing the "tax gap," or the amount of income that goes unreported by large corporations, by requiring more comprehensive reporting.
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