Republican radio address: Taxes of ObamaCare

For the weekend of July 10-11, 2010

Greetings, this is Andre Cushing, state representative from Hampden.

Last spring, before the Obamacare health legislation passed Congress, we heard one of the most shocking statements ever made by a high-ranking federal official. Speaker of the House Nancy Pelosi told an audience, “We have to pass the health care bill to find out what’s in it.” Remember, this bill came to more than 2,400 pages. It will transform one-sixth of the U.S. economy and personally affect every American. It will create more than 100 new federal agencies and impose massive taxation on the productive members of our society. It is one of the most far-reaching and nation-changing laws in our history. And Nancy Pelosi’s attitude was, “Trust us.”

The American people are now learning more about Obamacare and they don’t like what they see. Public opinion ran strongly against this legislation during the long debate on Capitol Hill. The Democrats who wrote the bill and strong-armed it through Congress had to bribe their own members to vote for it with special breaks – the Cornhusker Kickback, the Louisiana Purchase and similar cash for cloture deals. All Republicans voted no. They knew this was a terrible bill that would spawn vast and damaging consequences for our health care system and our economy.

As of now, more than 60 percent of Americans want the whole thing repealed. President Obama boasted that people would like the new law once they got to know it. But just the opposite has happened. The more people know about it, the less they like it. We’re all starting to sort out the major and minor disasters hidden inside this 400,000-word monstrosity.

I want to focus for a moment on one of them, a tax provision that will have an extremely negative impact on small business. Like much of the Obamacare bill, it has nothing to do with health care but rather with putting our economy under tight federal control. We know that small business is the backbone of our economy and creates about 80 percent of all new jobs. With the unemployment rate nearly 10 percent, we’re all counting on small businesses to put folks back to work.

But thanks to Obamacare, small companies will soon face a huge new burden when it comes to the use of IRS Form 1099. Right now, these tax forms are issued in a few limited situations, such as when paying outside consultants. But with little discussion, the Democrats sneaked in a provision to the Tax Code’s Section 6041 that will force companies to file 1099s on nearly every business-to-business transaction. The new requirement will unleash an avalanche of paperwork demanded by the IRS. As one analyst said, “It appears to be a costly, anti-business nightmare.” Congress hopes to raise $17 billion through this new mandate.

A Cato Institute breakdown of the law says businesses will have to issue 1099s whenever they do more than $600 of business with another entity in a year. In a $14 trillion economy, that’s a lot of transactions. The changes will force millions of businesses to issue hundreds of millions, or perhaps billions, of additional IRS Form 1099s every year.

When a small business buys a used car, it will have to gather information on the seller, including a Taxpayer Identification Number, and mail 1099s to the seller and the IRS. The seller will do the same. If the vendor does not supply you with a Taxpayer ID Number, you are obligated to withhold taxes on your payments. When a small shop owner pays her rent, she will have to send a 1099 to the landlord and the IRS. Buy a new set of tools, issue another one. It cuts across the entire business spectrum – software, office supplies, airline tickets, hotels, rental cars, gas for a truck, janitorial services and so on. A Laundromat that buys soap each week from a local distributor will have to send the supplier a 1099 at the end of the year tallying up their purchases.

This will be a huge administrative burden even for businesses with computerized record keeping. For the millions of small businesses that still do bookkeeping by hand, the cost in both time and money will be devastating. According to the National Federation of Independent Business, this will pose a terrible hardship for small business owners who already suffer under unmanageable federal paperwork burdens. The potential for mistakes and lost forms is tremendous, and with errors would come audits and penalties. No wonder the IRS is hiring 16,000 new agents to police the health care bill.

Private transactions are the core of a market economy. Now the Obama Democrats are imposing a vast web of red tape on billions of these growth-generating private exchanges. And for what? To squeeze even more money out of the business community so our spendthrift Congress can fully launch Obamacare, which the nation no longer wants.

This is Andre Cushing. Thank you for listening.