Senate Fails Small-Business Owners on 1099 Reform

Much of the news this week was about the election and the tea partiers but Congress is back in session and there are some law making details that are kind of interesting.

Ezra Klein wrote a nice piece Senate fails small-business owners on 1099 reform. He explains the issue as follows:

"The 1099 reporting requirement raises $17 billion in the health-care bill. It says that businesses have to report every purchase from every vendor above $600. Those purchases currently go unreported, and taxes related to them often go unpaid. Tracking them will fix that, and the government will collect some much-needed coin. But getting there will require a lot of paperwork. Enough, actually, that many people on both sides of the aisle are convinced it's simply not worth it. And they're right. Making the lives of small-business owners miserable isn't a good idea."

"The Senate considered two different proposals to reform that law today. One, from Bill Nelson, would've exempted purchases of less than $5,000 (which is 90 percent of them) and paid for the lost revenue by cutting oil and gas subsidies. Another, by Mike Johanns, would've repealed the provision entirely and paid for it by cutting spending on public health and weakening the individual mandate. Both failed."

"Nelson's 56 ayes included zero Republicans. Johanns's 46 ayes included seven Democrats. So though both amendments were designed to do the same thing, there was very little overlap among their supporters. Most Democrats weren't willing to weaken the individual mandate or our public health infrastructure. No Republicans were willing to cut oil and gas subsidies to free small-business owners from a law they describe as ruinous."

Kevin Drum follows up. "So here you've got Democrats agreeing to modify the requirement and offset the cost by cutting oil and gas subsidies. Who could be against that? I mean, who's actually in favor of oil and gas subsidies? Come on down, Rep. Paul Ryan!."

Klein followed up on The difference between the parties. "Democrats came up with another way to do it, this time by closing a tax loophole that allows hedge-fund managers to be taxed at a much lower rate than people in other professions. Republicans don't like this, either." So there you go, the GOP likes hedge fund managers and their clearly out of line tax break, more than they do small business owners. If only Democrats would say this out loud on TV or some thing.