Today in Washington - September 14, 2010

Tax cuts are the talk today in Washington.  The elites in Washington want to promise some sort of tax relief to voters, because they are scared that ObamaCare, the Stimulus and other attempts to expand the federal government have angered the voters.  These promised tax cuts may be too little – too late for many incumbents.

The Senate will vote today on an amendment from Senator Mike Johanns (R-NE) to repeal the requirement in ObamaCare that forces all businesses to file 1099 forms with the Internal Revenue Service for transactions between businesses that exceed $600.  This is a paperwork nightmare for the business community.  The House will vote on 8 suspension bills today.  The Senate is also working on an impeachment of U.S. District Court Judge G. Thomas Porteous.

Curtis Dubay, tax analyst at The Heritage Foundation (my employer), has written about the ObamaCare 1099 provision:

Tucked away in the legislation that made Obamacare into law is a tax provision that will be a compliance nightmare for small businesses if it ever goes into effect. The provision calls for all businesses to file 1099 forms with the IRS for all transactions with other businesses over $600.

Dubay explains that this requirement is a bad idea.

Businesses are not like individuals. They purchase lots of items in large quantities. As a result, if the Obamacare reporting requirement goes into effect as scheduled in 2012, it would create an enormous compliance burden on businesses. Businesses would have to file millions of new forms with the IRS. Small businesses would be especially hard hit, because they do not have large accounting departments that can absorb more bureaucracy like larger businesses.

This is the first battle over the repeal of ObamaCare and this debate today in the Senate is expected to result in a partial repeal at least one provision of ObamaCare. 

The other battle raging in the Congress is the debate over how many of your taxes will be raised in 2011.  Politicoreports that Congressman Jim Matheson (D-UT), Glenn Nye (D-VA), Melissa Bean (D-IL) and Gary Peters (D-MI) have drafted a letter to Speaker Pelosi pleading for a full extension of all of income tax rate reductions scheduled to expire this year. 

These members wrote the following:
We believe in times of economic recovery it makes good sense to maintain things as they are in the short term, to provide families and businesses the certainty required to plan and make sound budget decisions.
Even some Democrats are working to keep taxes low, because they are looking at poll numbers.  Many Democrats from conservative leaning states are worried.  This battle may flare up in both the House and Senate before the next recess, so Conservatives need to watch this battle over tax policy closely as this debate develops.