After digesting the 2,000 page healthcare bill, legislators and pundits realized it contained numerous problematic provisions, specifically, the 1099 reporting requirements for small businesses.
The Senate looks to remedy this oversight by passing one of two amendments, SA 4596, proposed by Sen. Johanns, R-Neb., or SA 4595, proposed by Sen. Bill Nelson, D-Fla.
Here's a letter sent to urge members to support Johanns’ proposal and oppose Nelson’s.
13 September 2010
On behalf of Americans for Tax Reform (ATR) and millions of taxpayers nationwide, I urge you to support Senator Mike Johanns’ (R-Neb.) amendment, SA 4596, and oppose Senator Bill Nelson’s (D-Fla.) amendment, SA 4595, to HR 5297, the Small Business Lending Act.
ATR will keyvote in favor of the Johanns amendment and urges you to vote against the Nelson amendment.
While both amendments look to remedy the burdensome 1099 reporting requirements imposed on small businesses by the Patient Protection and Affordability Care Act, they achieve this goal in markedly different ways.
To fund exemptions for some small businesses, Senator Nelson’s amendment repeals the Section 199 manufacturing deduction for the nation’s leading oil and natural gas companies. Enacted in 2004 to foster domestic job creation and economic growth, Section 199 allows American companies to deduct a portion of their income derived from domestic production and manufacturing activities.
Repealing this job creating tax rule is an effective tax increase on an industry that indirectly or directly employs over 9 million workers and adds over a trillion dollars to the American economy.
Conversely, Senator Johanns’ proposed amendment reduces government spending by cutting unnecessary programs and uses the savings garnered to exempt small businesses from the onerous 1099 reporting requirements.
The impetus behind both proposed amendments is to alleviate the economic burden 1099 reporting would place on small businesses--experts estimate that filing a 1099 would cost a small business $23,000 per year. This unnecessary paperwork ends up being a drag on the economy--a point both Senators Nelson and Johanns recognize—and, thus, must be revoked.
Although Senator Nelson acknowledges that burdening small businesses with additional costs would hamstring economic growth and hinder job creation, he fails to see that raising taxes on America’s oil and natural gas producers, in fact, results in the same economic repercussions he is attempting to avert—fewer jobs and slower growth. That is, he is simply shifting economic damages from small businesses to oil and natural gas producers.
Senator Johanns’ amendment, however, looks to rectify the vexing problem facing America; we are simply spending too much. His proposal is one that alleviates small businesses while not arbitrarily punishing one of America’s most productive industries.
It is for these reasons that I urge you to support SA 4596 and oppose SA 4595.
Grover G. Norquist
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