Spare the Cheaters, Screw the Lower Income Earners

One of the pro­vi­sions of the Afford­able Care Act is a require­ment that busi­ness­es more com­plete­ly report pay­ments made to oth­ers. This is done with form 1099. I believe cur­rent­ly the law requires a 1099 any­time pay­ments exceed­ing $600 with­in a year are made to an indi­vid­ual or a com­pa­ny that is not incor­po­rat­ed. I’m not sure how the ACA changed this, but I assume that the $600 thresh­old is low­er, maybe all the way to zero.

The inter­est­ing thing here is, this change rais­es rev­enue (and it is dou­bly inter­est­ing that nobody argues with that). The only way this could raise rev­enue is if it puts income on the radar of the IRS that would not oth­er­wise have been report­ed. In oth­er words, it catch­es tax cheats.

Of course, the busi­ness com­mu­ni­ty and Repub­li­cans do not talk about the tax cheats. They talk about the extra bur­den of the addi­tion­al 1099’s on business.

Extra bur­den? If your busi­ness is so small that the books are not on com­put­er, then you like­ly will not be mak­ing out very many 1099s, and doing so will not be that dif­fi­cult since you can prob­a­bly scan a years worth of checks for relevent pay­outs in a few min­utes. And if your books are on com­put­er, then the next soft­ware upgrade will accom­mo­date the new requirement.

I’m sor­ry, but the extra bur­den argu­ment is bogus. This is in defense of tax cheats. Remem­ber, every time you hear calls for the elim­i­na­tion of the IRS there is a good chance you are hear­ing “Tax cheats should be able to get away with it.”

So, to make sure that tax cheats can con­tin­ue with impuni­ty, Con­gress wants to remove the height­ened 1099 require­ment. Since it rais­es rev­enue, its removal must be bal­anced with oth­er rev­enue or costs must be cut. It seems the choice is to low­er the sub­sidy to low income people.

Oba­ma has said that he is will­ing to take the 1099 require­ment out of the Afford­able Care Act. We will see if he is hap­py with how it is paid for.

The class war continues.

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