COMMITTEE on WAYS and MEANS

Chairman Dave Camp

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Camp Floor Statement: H.R. 4 - The Small Business Paperwork Mandate Elimination Act of 2011

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Washington, Mar 3, 2011 | comments

Washington, DC - Ways and Means Chairman Dave Camp (R-MI) today delivered a statement on the House floor in support of H.R. 4 - The Small Business Paperwork Mandate Elimination Act of 2011.  Below are excerpts, followed by the full remarks.

1099 Provisions Hinder Job Creation

“This previously little-known provision quickly became an item of great concern to small employers across the country.  The National Federation of Independent Business (NFIB), whose 350,000 members support H.R. 4, said that this newly enacted reporting requirement would have a “direct negative impact on small businesses...

"Neither of these provisions reflects the wishes or needs of the American people.  The most important issue on their minds is jobs.  Let me say it again – jobs, jobs and jobs.  But, despite the call for policies that can create a better climate for job creation, Congress has enacted policies that make this harder.”

This Bill Does Not Increase Taxes
“So let’s be clear here.  Voluntarily choosing to not enroll in government health care and thus forgoing the associated tax subsidies that one may not be eligible for might result in more government revenue according to the Joint Tax Committee, but it is NOT a tax increase…Grover Norquist of ATR wrote he was especially pleased about the repeal of the 1099 rental provisions – and that the bill is ‘a net tax cut.’”

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Today, the House considers H.R. 4, legislation repealing one of the job-killing tax increases enacted in the Democrats’ health law last year.  This legislation provides a pathway to achieving a goal that is shared by Republicans and Democrats in the House and Senate alike, and by the Obama Administration – repealing the Form 1099 reporting requirements enacted last year.  

Before I get into the details of H.R. 4, I would like to take a moment to recognize and commend my colleague and friend, Dan Lungren.  He first brought this issue to light, and through his hard work, we’re here today to vote on a bill that has enjoyed strong bipartisan support.

We’ve been here talking about 1099s before.  Some have even gone so far as to say that “There seems to have been a thousand ninety-nine votes to repeal 1099’s.”  While we’ve attempted in the past to repeal this misguided feature of last year’s health overhaul, today we turn a corner and move H.R. 4 from the House to the Senate, so that it will hopefully soon be sent to the President for his signature.  Only then will small businesses and families have certainty that they will not be buried under an avalanche of tax paperwork. 

In 2010, as one of many ways to finance a trillion dollar health care law, tax information reporting rules were expanded.  These new rules require businesses to issue a Form 1099 for any payments to corporations (rather than just to individuals) and for any payments for property (rather than just for services or investment income) that exceed $600 over the course of a year. 

This previously little-known provision quickly became an item of great concern to small employers across the country.  The National Federation of Independent Business (NFIB), whose 350,000 members support H.R. 4, said that this newly enacted reporting requirement would have a “direct negative impact on small businesses.” 

Unfortunately, in September of last year, 1099 reporting was expanded again to help pay for the small business lending law.  This expansion treats the recipient of rental income from real estate as engaging in the trade or business of renting property.  Unless repealed, families and individuals will be forced to fill out paperwork if they do something as basic as replace a refrigerator in the apartment they rent out.  The National Association of Realtors, which supports H.R. 4, called this provision, “not only another paperwork burden, but a trap for all small landlords.”

Neither of these provisions reflects the wishes or needs of the American people.  The most important issue on their minds is jobs.  Let me say it again – jobs, jobs and jobs.  But, despite the call for policies that can create a better climate for job creation, Congress has enacted policies that make this harder. 

H.R. 4 will accomplish three goals.  First, the legislation repeals the expanded 1099 reporting requirements on small businesses.  Second, it repeals the new 1099 reporting requirements for rental property.  Third, it protects taxpayers by recovering overpayments of taxpayer-funded government subsidies.

What that means – and I know we are going to hear a lot about it from the other side today – is that if this bill passes, anyone earning more than 400 percent of poverty (nearly $95,000 for a family of four in 2014), and who is ineligible for the Exchange subsidies under the 2010 health law in the first place, will now be required to pay back all – not just some – of the improper payments.  I’d like to note that this is the same level Democrats used in the original law enacted last March.

And for those earning less than 400 percent of poverty, the level of repayment for those overpayments is also increased.  This is similar to the path taken by Democrats in December when they adjusted the repayment amounts as a way to finance the “Doc-fix.”

Now, I noticed yesterday that there was a lot of huffing and puffing on the Floor about alleged tax increases in H.R. 4.  I want to be sure that I clear up any confusion on that point.  The Joint Committee on Taxation says in its score that in addition to a $20 billion spending cut, there is a $5 billion increase in revenue to the government from this one provision.  But that doesn’t mean people are necessarily paying more in taxes.  How is that possible? 

Simple. 

According to the non-partisan Joint Committee on Taxation, under the better enforcement rules of H.R. 4, there will be some people who decide not to buy coverage through the health insurance Exchange because it’s no longer as attractive to accept a taxpayer-funded subsidy that they are not eligible for now that they would be required to pay a larger share, or in some cases all, of it back under H.R. 4. 

For example, under current law, a household making $105,000 might think it’s worth understating its income – or at least not updating their income information -- in order to receive a $12,000 Exchange subsidy because it would only have to pay back $3,000 if it got caught.  But the household is less likely to do so under H.R. 4 because it would have to pay back the entire subsidy, given that it wasn’t eligible for it in the first place. 

So let’s be clear here.  Voluntarily choosing to not enroll in government health care and thus forgoing the associated tax subsidies that one may not be eligible for might result in more government revenue according to the Joint Tax Committee, but it is NOT a tax increase.

H.R. 4 is endorsed by more than 225 organizations including:  The American Farm Bureau, the U.S. Chamber of Commerce, the American Osteopathic Association and Americans for Tax Reform.  Grover Norquist of ATR wrote he was especially pleased about the repeal of the 1099 rental provisions – and that the bill is “a net tax cut.”  

That’s because, despite the claims to the contrary, H.R. 4 reduces federal spending by nearly $20 billion over the next 10 years.  It also reduces the deficit by $166 million over that same time.  That’s probably why the bill is supported by Americans for Prosperity and the National Taxpayers Union, too.   And at this time I’d like to request unanimous consent that the list of supporting groups be entered into the record.

Today we have the opportunity to come together and advance a bill that is a win for small businesses, families and taxpayers across America.  Cast a yes vote for H.R. 4 and give them that win.

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