House votes to repeal reviled requirement in health law

McClatchy NewspapersMarch 3, 2011 

WASHINGTON — The House of Representatives on Thursday sliced a little bit out of the big health care law, with Democrats joining Republicans in the bid to ease business burdens.

Amid some partisan and interpersonal flare-ups, the House voted 314-112 to repeal an expanded tax-reporting requirement imposed under the health care law last year. The provision primarily affects small businesses.

"The purpose of our bill is to help employers do what they do best," said Rep. Dan Lungren, R-Calif. "Plain and simple, they create jobs."

The bill removes the requirement that businesses file so-called 1099 forms with the Internal Revenue Service for every corporate transaction that totals more than $600. The intention of the expanded filing requirement was to help the IRS ensure tax compliance.

The bill restores the requirement that businesses file 1099 forms only for transactions with noncorporate entities, such as independent contractors.

While relatively modest, Lungren's bill could become the first successful effort to scale back any part of the 384,000-word health care legislation that was approved over Republican opposition last year.

"This is an indication of the kinds of things you'll find in the health care reform bill," Lungren said.

The House bill passed Thursday with the support of every voting Republican and 76 Democrats. A similar measure previously passed the Senate with bipartisan ease. Now the House and Senate must reconcile differences in the bills.

Even so, the House debate Wednesday and Thursday resurrected many of the tensions and talking points that had dominated earlier health care discussions.

All debate halted for about 15 minutes when Lungren formally objected to how Rep. Earl Blumenauer, D-Ore., characterized Republican views. Lungren accused Blumenauer of calling him a liar; Blumenauer subsequently said he was misunderstood.

The generally mild-mannered, bow-tied Blumenauer eventually withdrew his comments, faced with potential parliamentary sanctions of being kicked off the House floor and having his "words taken down."

Lungren's bill still incites Capitol Hill conflict, even though every lawmaker seems to agree with its goal. The biggest problem is how to pay for it.

Repealing the small-business tax-reporting requirement would cost the federal government about $21 billion in lost tax revenues over the next 10 years, according to the Congressional Budget Office. The bill offsets this by reducing certain health insurance subsidies.

"There is widespread agreement that the 1099 reporting requirement needs revision. So what's the hang-up?" said Rep. Henry Waxman, D-Calif. "The hang-up is the Republicans want to pay for this tax cut on the backs of lower-income families."

The Obama administration, in its formal statement of position, declared this week that it "strongly supports" repealing the tax-reporting provision but it also raised "serious concerns" about how the cost is offset.

Lungren first introduced his bill last April. At the time, he faced resistance from both sides of the aisle.

Some Republican leaders feared that the measure would distract from the higher-profile but long-shot proposal to repeal the entire health care law, Lungren noted Thursday. Democratic leaders, too, were trying to steer their rank-and-file members away from the GOP-authored measure; a review of House records shows that Democrats began signing on as co-sponsors only this year.

"It was slow going in the early days, I will say that, " Lungren said. "This has been somewhat of a long journey."

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