The bad news: as I predicted yesterday, the bipartisan effort to repeal the ObamaCare provision that requires companies to create 1099 forms for every business-to-business transaction has run aground on the shoals of Pay-Go. The good news: four months after the bill passed, the Associated Press has caught up to the story:
Tucked into the new health care law is a requirement that could become a paperwork nightmare for nearly 40 million businesses.
They must file tax forms for every vendor that sells them more than $600 in goods.
The goal is to prevent vendors from underreporting their income to the Internal Revenue Service. The government must think vendors are omitting a lot because the filing requirement is estimated to bring in $19 billion over the next decade.
Er, maybe the AP could have asked that question a few months ago. Three months ago, Cato’s Chris Edwards had not only identified the provision, but the potential scope of the problem. It would have been even more helpful to have had a debate on this provision earlier than that — oh, say, before Congress passed ObamaCare and Barack Obama signed it into law.
Instead, Democrats now need to either find new revenue to replace the $19 billion or make a commensurate amount of cuts, thanks to their Pay-Go rule and their no-deficit pledge for ObamaCare. Guess which approach they took?
Republicans want to repeal the filing requirement and pay for it by changing other parts of the new health care law, a strategy that Democratic leaders won’t support. Democrats want to repeal the filing requirement and pay for it by raising taxes on international corporations and limiting taxpayers’ ability to use special trusts to avoid gifts taxes. Republicans won’t support that.
The House rejected the Democratic bill Friday after Democratic leaders brought it up under a procedure that requires a two-thirds majority for approval. The vote was 241-154, with nearly all Democrats voting in favor of the bill and nearly all Republicans opposed.
And guess who’s fault is that, according to Democrats?
“Despite all of their rhetoric about the need to eliminate this reporting requirement, Republicans walked away from small businesses when it mattered most,” said Rep. Sander Levin, D-Mich., chairman of the tax-writing House Ways and Means Committee.
No, Republicans refused to raise taxes on businesses in order to rescue Democratic chestnuts from the fire. Business didn’t create this problem; Democrats did by passing a bill without proper debate, and without having a clue how its provisions would hamstring the private sector in red tape. And let’s not forget that at least in the House, Democrats can pass anything they like, with or without GOP assistance.
Levin can toss blame until he turns blue from the effort, but this debacle belongs to Levin, Pelosi, the Democrats, and Barack Obama. They have been hoisted with their own Pay-Go petard.