Since the last two attempts to fix the 1099 provision in the health law failed, Democrats are planning to introduce several measures that would repeal the entire reporting requirement — despite the broad agreement that sole proprietors are not paying their fair share of taxes. The crux of the argument is how to offset the estimated $17 billion that the extra reporting was estimated to have brought it.
Democrats have introduced several options:
- SEN. MARK BEGICH’s (D-AK) AMENDMENT: Repeal entire reporting requirement and makes up for the revenue (approximately $17 billion) by using unspent stimulus funds. But as Pat Garofalo explains, there are about $280 billion in stimulus spending that haven’t been paid out. “But much of the money has already been allocated, including $65 billion in funding for tax breaks, which are intentionally going out the door a little bit at a time.” Therefore, “canceling unspent stimulus funds would mean increasing taxes on the middle class.”
- HOUSE DEMS: Measures would repeal the reporting requirement and make up for the shortfall by “changing the inheritance tax (which is likely to get some GOP support) or a tax on carried interest (which is likely to be opposed by nearly all Republicans and some moderate Dems).” Garofalo is actually really excited about that latter offset.
- GOP RECALL PETITION: Rep. Dan Lungren (R-CA) is circulating a discharge petition to force a vote on his amendment to repeal the 1099 provision. The petition has 93 signatures.
POLITICO’s Pule suggests that these early difficulties in identifying adequate offsets bode poorly for the GOP’s repeal effort. If they want to repeal the entire health care law, Republicans would have to make up for the billions of dollars in deficit reductions; agreeing on set of uniform pay fors will prove challenging. In fact, beyond the deficit problem, repealing the health care law will also create problems in the Medicare program and continue the upward trajectory of health care spending (the health care law begins to bend the health care cost surve beginning in 2015). Expect all of this to cause major headaches for conservatives as their base holds them to their repeal pledge and watch as they turn to defunding the measure instead.