Around 11am et, the Senate will begin a complicated series of votes on the small business bill. First an amendment from Mike Johanns (R-NE), then from Bill Nelson (D-FL), then a substitute amendment on the whole bill from Max Baucus will get cloture votes. If the Johanns amendment clears cloture, there will be 30 hours of debate and a vote. If it fails to clear cloture, they move to the Nelson amendment. If that clears cloture, there will be 30 hours of debate and a vote. If it fails, they move to the Baucus substitute amendment. The working assumption is that the small business bill (and thus the Baucus substitute) will pass, but first they have to work through these amendments. [Update: Both the Johans and Nelson amendments failed to clear cloture. The bill advances.]
What’s their deal? They actually have to do with some reporting requirements passed in the Affordable Care Act. As a pay-for in the bill, the ACA mandated 1099 reporting for all businesses on certain transactions over $600. The idea here is that companies routinely don’t report such purchases, and summarily don’t pay taxes on them. So basically, the amendment from Johanns eliminates this requirement, and allows businesses to freely evade taxes again. The Nelson amendment would exempt small businesses with less than 25 workers from the requirement, and raise the threshold on transactions to $5,000.
Whatever you think about the burdensome nature of the paperwork, what Johanns and Nelson want is, in fact, legalized tax evasion under the law. We know this because the Congressional Budget Office has attached a cost to their amendments, mindful that failing to mandate reporting will lead to a failure to pay the IRS. The Johanns amendment, for example would cost $17.1 billion over 10 years; the Nelson amendment, somewhat less. How do both amendments pay for themselves? The Nelson amendment taxes the oil and gas industry; the Johanns amendment virtually eliminates the Prevention and Public Health Fund set up through the ACA. [cont’d.]
The Prevention and Public Health Fund, established as part of health reform, is a 10-year $15 billion commitment to wellness. Instead of just treating illness, the fund invests in proven strategies that prevent people from getting sick in the first place — and that save money down the line. It would provide much needed funding to support community-based tobacco cessation and prevention programs, initiatives to reduce diabetes and heart disease, breast and colon cancer screenings, and adult vaccine programs.
Additionally, community prevention efforts support smart communities where people can walk to work, access public transportation safely and easily, and buy fresh fruits and vegetables right in their neighborhood […]
And the motives behind the amendment may be less altruistic for small business than they seem. Sen. Johanns has previously stated that repealing health reform is on his agenda, even if it has to happen piece by piece. In addition to eliminating crucial prevention dollars, his amendment starts the dismantling of health reform, by reducing the number of Americans who will be covered by health insurance and increasing the cost of premiums for those who are insured. Small businesses stand to gain as much as $40 billion in tax credits through the existing health reform law, and see lower premium costs to boot.
The Johanns amendment would also weaken the individual mandate, which would mean that fewer people would take subsidies, lowering costs to the government.
The White House supports the Nelson amendment, and voting on the amendments will probably fall along partisan lines (though Nelson’s amendment, which does address the reporting issue, may attract significant bipartisan support and thusly pass). So both parties agree; small businesses should be allowed to cheat on their taxes. In effect, this becomes a small business tax cut (yet again) paid for by an oil company tax increase. Really it just shifts the subsidy from oil and gas companies (which get $35 billion in subsidies a year) to small businesses, which I suppose is defensible.
UPDATE: It should be known that plenty of progressives find the reporting requirements quite burdensome.