If there’s one thing that both parties can agree on about health care reform, it’s that the 1099 tax reporting provision for businesses has got to go. Democrats and Republicans both concur that requiring businesses to report any health-care expenses greater than $600 to the IRS is needlessly burdensome. Even President Obama has singled out the provision as an onerous regulation that is particularly tough on small businesses. And on Monday, there was the sign of some forward momentum on the issue: both Sen. Max Baucus (D-Mont.) and Sen. Mike Johanns (R-Neb.) announced their plans to introduce separate 1099 repeal bills.
But despite the overwhelming bipartisan support to repeal 1099, actually devising a feasible legislative solution could still be tough sledding. During the lame-duck session just a few weeks ago, Baucus and Johanns introduced the same respective 1099 repeal provisions, and both failed to gain enough votes to pass, despite the near-unanimity that the measure has to go. The problem? Baucus’ proposal wasn’t paid for, so it would end up increasing the deficit by some $19 billion. Johanns repeal provision, on the other hand, paid for itself through budget cuts to federal agencies that some Democrats were loath to support.
Baucus previously agreed to work with Johanns to hammer out a compromise, but it’s easy to see how legislative gridlock could delay 1099 repeal yet again. Given the GOP’s strengthened numbers in the Senate and new House majority, Johanns will likely have more leverage to demand the budget cuts in exchange for 1099 repeal. But despite their call to shred reform, piece by piece, Republicans could also be wary about handing the Democrats a clear bipartisan victory on the issue and ratchet up their demands for budget-slashing even further.