WSJ on ‘The 1099 Insurrection’

WSJ on ‘The 1099 Insurrection;’ BizzyBlog

In a WSJ editorial this morning, we learn that the White House opposes repealing the onerous 1099 rules in ObamaCare, and notes that the revenue-raising arguments of its supporters aren’t even supported by the IRS:

You might not have seen it reported, but the Senate will vote this morning on whether to repeal part of ObamaCare that it passed only months ago. The White House is opposed, but this fight is likely to be the first of many as Americans discover—as Nancy Pelosi once famously predicted—what’s in the bill.


… But this “tax gap” of unreported business income is largely a Beltway myth, and no less than the Treasury Department’s National Taxpayer Advocate Nina Olson says the costs will be “disproportionate as compared with any resulting improvements in tax compliance."


Meanwhile, small businesses are staring in horror toward 2013, when the 1099 mandate will hit more than 30 million of them. Currently businesses only have to tell the IRS the value of services they purchase from vendors and the like. Under the new rules, they’ll have to report the value of goods and merchandise they purchase as well, adding vast accounting and paperwork costs.


Think about a midsized trucking company. The back office would have to collect hundreds of thousands of receipts from every gas station where its drivers filled up and figure out where it spent more than $600 that year. Then it would also need to match those payments to the stations’ corporate parents.


Most Democrats now claim they were blindsided and didn’t understand the implications of the 1099 provision—which is typical of the slapdash, destructive way the bill was written and passed. As the critics claimed, most Members had no idea what they were voting on.

Do the math: If each of the 30 million small businesses cited issues only 35 extra 1099 forms over and above the very few they are already generating, that’s over a billion new multi-part forms (or, in some cases, transmissions — ADP and other service providers are probably the only people lovin’ this), accompanied by a billion transmissions to Uncle Sam done by paper or electronically. That’s before we get the mountain of paper and transmissions larger companies will generate, or the new generators dragged into the system for absolutely no reason (e.g., small self-employed businesses that don’t generate income, hobbies that break even or lose money, etc.).


If you get the impression that yours truly believes that “most Members had no idea what they were voting on” is a Hall of Shame outrage, you have the correct impression. But as bad as it is that most didn’t read it, it’s even worse for the few than might have known that the 1099 crap was in there and STILL voted for it. Either way, this is yet more proof, as if any more were needed, that anyone who voted for ObamaCare deserves to be voted out of office. There are no excuses.

Comment: As specialization and decentralization grows exponentially in the private sector, government continues to consolidate power in this bizarre belief that they, the politicians, can know more than the market. Yet here we have another of a thousand examples of the reality, government failure.

But while Obama should be voted out office, it's going to take more than just changing seats in Congress with the other side of the statist coin; it's going to take a whole new outlook based upon a serious commitment toward limited government if we are going to change the tide in this country.