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Tax Repeal is Stuck in Congress

Repeal of a controversial 1099 small business reporting requirement is 'stuck' in a political quagmire, even after the U.S. House and Senate both passed repeal bills.

The problem is not repeal of 1099 reporting of vendor purchases, intended to raise some $20 billion for health care reform; Democrats, Republicans and the President all want repeal of the paperwork nightmare. American Farm Bureau's Pat Wolff says the problem is disagreement over how to make up the revenue loss. Wolff says there is enough time before next January to solve the revenue offset issue. The question is whether Congress will get a bill to the President's desk.

Senator Mike Johanns, R-Neb., lashed out at Democrats Tuesday. A clearly frustrated Johanns took to the Senate floor ahead of expected votes and after Democrats offered an amendment to his 1099 repeal measure to study the impact of repeal on small business health costs.

"It astounds me that we that we can seemingly pass benchmark after benchmark without going over the finish line," Johanns said. "How can we make so much important progress only to be stymied again and again by some silent opposition."

Senator Robert Menendez, D-N.J., who sponsored the amendment to the Johanns measure, denied his move would slow repeal.

"My amendment directs a study to be done after repeal of 1099 is signed into law," Menendez said. "Let me make it clear, nothing in my amendment slows down repeal of 1099."

Menendez and other Democrats argue repeal could raise business health care costs and reduce employee coverage by recapturing unearned tax breaks. House Democrats made a similar argument when the House passed its 1099 repeal bill. Johanns' measure is identical to the House bill.

"Requiring someone to repay what was given to them erroneously is just plain and simple good government," Johanns said. "Even Secretary of Health and Human Services (Kathleen) Sebelius noted that repayment of improper subsidies is, quote, is fair fall all recipients and all taxpayers, unquote."

Johanns called arguments over the offset to pay for repeal hollow excuses to justify inaction. Menendez insisted he'd allow repeal to go ahead unless his study later finds small businesses are hurt.