Economics

Will ObamaCare Harm Small Businesses?

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Dan Danner, president of the National Federation of Independent Business, takes to the pages of the Wall Street Journal to explain why ObamaCare will be a disaster for small businesses:

While the health insurance fee was designed to "go after" large health-insurance companies, the reality is that insurers aren't simply going to absorb this new tax; it will be passed on to customers. Specifically, it will be passed on to the plans that 87% of small businesses and individuals buy. A study by the Federal Policy Group published last October found that the amount of taxes passed on to the typical family of four could be $500 or more per year.

Adding insult to injury, the law also requires all businesses to issue IRS 1099 forms to document every business-to-business transaction of $600 or more. To someone who's never run a business, this may sound like nothing. But Congress hopes to raise $17 billion in added tax revenues and fees from this new mandate. That's hardly nothing.

The burden of raising that expected revenue falls again on the backs of small business owners who already suffer under unmanageable federal paperwork burdens. What's worse, this new reporting requirement has absolutely nothing to do with health-care reform. It was included to help pay for the nearly trillion-dollar price tag of the bill. Why should small business owners have to pay for a bill that causes them so much harm? They shouldn't, which is why NFIB is fighting against this law in court.

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  1. Wow, it’s a good thing people like joe saw through Obama’s lies:

    joe|12.10.08 @ 1:19PM|#

    It’s going to be nice having a president who’s honest.

    For

    A

    CHANGE.

    Glad he never posted with blinders on.

    1. There’s a very good reason joe doesn’t dare show his face around here, sage.

      1. There’s a very good reason joe doesn’t dare show his face gorilla mask around here

        Heh, I love the strikeout feature.

        1. It IS a good statement – it would be nice to have a president who is honest.

          So… when are we gonna get one? Or should I just hang out in this wicker contraption, and wonder why it’s getting warmer and I have this sensation of descending?

          1. My campaign promise to be honest was more like a guideline or suggestion.

  2. document every business-to-business transaction of $600 or more.

    in other words, do some extra work for free, something a govt. employee can’t even comprehend.

    1. in other words, do some extra work for free, something a govt. employee can’t even comprehend.

      Too many words, PR.

    2. As the head of an accounting department, I can’t begin to describe how utterly stupid this is. Sometimes these career government people and politicians who’ve never had a real job are like a baby with a loaded handgun. When they manage to pull the trigger, they have no idea what they’re gonna hit, but it won’t be pretty.

      1. Actually, a baby isn’t strong enough to pick up a gun nor pull the trigger.

        I’d say it’s more like a drunk 13 year old with a gun. Doubly stupid and leathally armed.

    3. I’m trying to wrap my head around this. If it’s as literally true as it’s written, it’s a damn nightmare. I’ve got to call my accountant.

      1. It’s not EVERY transaction over $600 – it’s one form sent every year to all business to whom you pay at least $600 in that year. Currently, you have to do the same thing, but it’s primarily aimed at contract labor and fees paid through attorneys, rents, prizes and a myriad of other non-inventory related payments. Corporations are exempt from receiving the 1099’s. Producing the forms once a year can be a hassle for a small business, but it might actually be a little easier to send the form to every vendor, utility company, contractor and everyone else you pay at least $600 a year to than to keep track of who is a 1099 recipient throughout the year. I am the one-man accounting department for a small manufacturer and I currently send less than 30 1099’s a year. Under the new law, I’ll be sending a couple of hundred or more. However, now I have to get tax information from every vendor and contractor we use to determine which ones get the 1099, so the new law might actually save me a little work, but it won’t cost me a lot of time. Either way, this looks to be a minor inconvenience compared to the massive record keeping requirements the rest of the law is going to dump on me.

  3. the law also requires all businesses to issue IRS 1099 forms to document every business-to-business transaction of $600 or more

    Clearly Obama aspires that the U.S. more closely emulate Cleveland.

    1. I think that’s be an insult to Cleveland.

  4. the law also requires all businesses to issue IRS 1099 forms to document every business-to-business transaction of $600 or more.

    I’m not even sure what they’re after, with this. Do they really think they’re going to tap some vast stream of unreported income by doing this?

    Dear Congress:

    If you guys weren’t such a pack of worthless thieving douchebags, people might be slightly less averse to paying.

  5. Do they really think they’re going to tap some vast stream of unreported income by doing this?

    They’ll get less.

  6. My boss recently had lunch with our health insurance consultant. He says organizations like ours (< 50 employees) whose plans have come up for renewal in the last couple of months are seeing premium increases of around 20%.

    We’re a credit union – the financial institutions that got no $ in the financial industry bailout (in fact, we got slammed last year to bail out the big guys further up the food chain, and fully expect to get slammed again later this year whenever the NCUA decides how much we have to cough up.) We WANT to loan money, but decent borrowers don’t want to borrow, so our earnings can’t keep up with our relentless growth in deposits. Now this will drive our expenses up higher OR force us to charge more for (or stop offering) employee and/or dependent coverage.

    I guess the plan IS to drive everyone out of business!

    /rant

  7. The new 1099 rules are just the nose in the tent for the VAT. We have got to stop this before it goes any farther.

    1. Exactly. I called my accountant and he said he hasn’t heard of this passing but he said it has been attempted in the last 10 years.

      I am a S10 corp in Cali and they will be coming after us for this when in the past a W9 stating a corporation relieves us from receiving a 1099 from any of our customers.

      Besides being evil, this is just unworkable as I would have to hire additional people just to keep up with this paperwork nightmare. And how the f*ck are my suppliers going to handle this burden? It really is unworkable and force me to break a law for some minor oversight.

      We are doomed.

      1. Prediction:
        There will be an *amazing* number of b-2-b transactions priced at $590 next year.
        One bill at $590, another at, oh, $375 or whatever means two invoices and two shipping charges. But it will be cheaper than the alternative.

        1. Nope, that won’t work. $600 means total in a given year, not per transaction.

          So imagine how thrilled Apple, Dell, Home Depot, etc. etc. will be when they get tens of thousands of 1099s from every business who bought from them.

          1. My first thought was actually the utilities. Think about it: What business pays less than $600 a year in phone or electricity costs? Our rates are going to go up so the utilities can cover having to hire 200 accountants just to handle the 1099s they are going to receive. And their federal returns are going to be 2 feet thick.

        2. It’s not per transaction, it’s per year. That won’t help.

  8. REPEAL IT NOW.

  9. In the interest of full disclose, I am not Dan Danner.

    But he was a way cooler name.

  10. *disclosure, argh

    1. What about disrobesure?

  11. To directly answer the head line: Will ObamaCare harm small business?

    Well Duh, stupid.

  12. What about Jonathan Johns rebuttal?

  13. Gosh, we haven’t yet recovered from the disasters of Social Security, unemployment benefits, Medicare, and Medicade–and now afforable health care for most everybody. Where will it end? Some sort of guaranteed annual income? What a donward spiral. Thank God for geniuses like Ron and Rand Paul and Sarah Palin!

    1. SS and Medicare are bankrupt and their unfunded liability adds up to hundreds of trillions. The right has its Sarah Palins and the left has its Al Sharptons.

    2. Bernard|5.27.10 @ 6:00PM|#
      “Gosh, we haven’t yet recovered from the disasters of Social Security, unemployment benefits, Medicare, and Medicade…”

      So borrowing to support bankrupt policies is just fine with you? No harm done?
      Are you a brain-dead lefty by any chance?

      1. The part about “guaranteed annual income” raises some flags. Commies talk about shit like that.

    3. Are you one of those idiots who thinks that the government can just print more money?

  14. I attended an on-line CLE program today about PPACA (a/k/a Obamacare) and the rules for employers. The transaction costs associated with this thing are gonna make SarbOx compliance look like a job application to be a bagger at A&P.

    1. I’m getting the image of Barack Obama with a pillow pressed tightly across the face of American enterprise, grinning maniacally.

      Marxie cock sucker.

  15. One of the biggest mistakes our government/society ever did was attaching purchasing health insurance to employement.

    1. That was a result (i.e. unintended consequence) of capping salaries as a way of trying to contain inflation as I recall.

      1. That’s exactly what it was.
        Wages and prices were fixed during (and a bit after) WWII. ‘Free’ medical care was a way to attract good help without ‘breaking the law’. Sorta.

  16. I, for one, look forward to our new black market economy.

    1. going to Latin America for your medical procedures?

      1. Sure, assuming I have any money left to do so.

  17. Found the 1099 article

    http://tinyurl.com/1099Madness

    That’s absolutely incredible. The sheer ignorance required to come up with a proposal like that is unimaginable.

    Next career political staffer I meet, I might strangle them. They have no damn clue what it takes to run a business. Shakespeare was right.

    1. Pasting a paragraph from that TinyUrl article (posted above by Corduroy):

      **********
      Basically, businesses will have to issue 1099s whenever they do more than $600 of business with another entity in a year. For the $14 trillion U.S. economy, that’s a hell of a lot of 1099s. When a business buys a $1,000 used car, it will have to gather information on the seller and mail 1099s to the seller and the IRS. When a small shop owner pays her rent, she will have to send a 1099 to the landlord and IRS. Recipients of the vast flood of these forms will have to match them with existing accounting records. There will be huge numbers of errors and mismatches, which will probably generate many costly battles with the IRS.

      **************

      Is this sustainable? Should we just let the government drown in its own paperwork for a year or so and simply wait for the inevitable policy change??

      1. Hey, it could be a feature, not a bug. Think of it as a DOS attack on the IRS.

        1. The problem is that the IRS doesn’t read it all. It goes into a filing system, a computer spits out a name to audit based on potential for fraud or just plain random numbers.

          Then they use that overwhelming amount of paperwork to hang you with. The more complicated the tax system gets, the more likely it is that they can find a problem to harass you with. Eventually, you just pay them to go away because court time is expensive and drawn out. It’s extortion tactics, similar to what DAs do with plea bargains.

      2. AGAIN: It’s ONE freaking form a year for the total amount you paid to each business you paid in the year. Any bookkeeper with a basic understanding of Quickbooks can run a report in 10 minutes and then spend hours typing the 1099’s or buy 1099 software. Either way, it’s a hassle, but nothing compared to even the most minor of the other record keeping requirements of the outrageous nation breaking unconstitutional attack on medical care and business.

  18. Do they really think they’re going to tap some vast stream of unreported income by doing this?

    Almost certainly. The IRS said so. Never mind the self-serving nature of IRS estimates of tax cheating, and the certainty that tax cheating is much less than they estimate. I know a lot more people who are too afraid of the IRS to take legitimate deductions than people knowingly lying on their tax returns.

    Also, juxtapose the fact that most tax cheating on the business side is by cash-intensive sole proprietorships with the new requirement that corporations be issued 1099s. Does not compute.

    1. It computes if you think that it’s the camel’s nose under the tent for VAT, and I’m certain the states will want to use the info for use tax enforcement as well.

  19. Obama has never had a real job, does not have a clue about business and does not give a shit about small businesses. He only cares about big companies, big unions and illegal immigrants.

  20. Perhaps someone can enlighten me, but I’ve read a little bit about this before, and I seem to recall that the requirement is to issue 1099’s to all vendor’s, etc. to whom you pay $600 TOTAL per year, not just transactions over $600. In other words, if you spend >$600 at, say Staples per year you must issue a 1099. Can someone verify this? If so, this is doubly fucked up.

    1. You got it. Previously 1099s were for services: if you paid someone more than $600 in a given year, you had to send them (and the IRS) one. Now it’s expanded to goods, so if you buy a new MacBook for your business, you owe Apple a 1099.

      1. Lunacy

        1. Oh, yeah. I’ve mentioned this in posts here weeks ago, and the more I think about it, the better it gets. Think of all the businesses that buy Ford trucks: Ford will get scores of thousands of 1099s. And each truck uses parts from scores of outside suppliers: Ford will have to send them 1099s. And each of the suppliers’ suppliers… and so on.

          I hope lots of people make a huge stink about this in, say, late October. I want to see this in political ads: “They snuck this into a ‘healthcare’ bill. Stop the Democrats before they try to sneak anything else through.”

      2. Service provided by non-corporations. which makes “some” sense. this is the single proprietorship that mows, paints, repairs and could conceivably not report income. By expanding to goods and corporations, the administration of 1099’s will be 100 times what it is today. Madness. Ford is going to hide income ? Microsoft ?

    2. NO, you don’t. Staples is a corporation and corporations do not receive 1099’s.

    3. Staples is a corporation, so, currently, you don’t send them a 1099. As a general rule, you don’t send 1099’s for purchases, just for services, prizes, amounts paid to claimants through attorneys, etc. The new rule will VASTLY increase the number of 1099’s issued. Actually, it will be less of a burden on small businesses, such as my employer, than on the larger businesses which will receive billions (literally) of the damned things, which they will have to reconcile for our masters in D.C.

  21. Is it even remotely possible that ObamaCare is just enough of an over reach, that we can one day get it repealed?

    Ha. The joke here is that I meant it, before uncle Sam is declared bankrupt. You don’t think he’s going to do that himself?

  22. Why should Obama give half a shit about small business?

    The only reason he wants commerce to survive at all, is so it can supply the funds needed to fuel his perpetual-welfare machinery. Otherwise, he’d be more than happy to help capitalism collapse entirely.

  23. LOL, I dont think “Obamacare” is gonna really do anything for anyone!

    Lou
    http://www.online-privacy.de.tc

  24. Goddamn you anon bot/skynet! How do you get this and not congress? Quit fucking with us and launch the missles already.

  25. Everything this administration touches turns to shit. Man, George Bush doesn’t look like such a fuck up anymore… oh wait, he pissed off so many people that they felt like they needed to elect a “reformer” HA!

    This ass clown is on TV today saying that the oil industry is too cozy with regulators. I’m sorry, but it takes two to tango. The man who was going to restore faith in government (for those who don’t have to pay for it) is the most defensive, egotistical, lawyer and union friendly politician I have ever seen. Speaks down the center, acts far left.

    Hope Change Hope!

    1. Hope and Change for a Bitter Future

  26. Yes, this is a CF. But as mentioned, it will be a kind of DOS attack on the IRS as most small business will fall below the threshold to electronically files these things. That means paper – lots of paper. Perhaps it was inserted as a way to increase business for the post office. I, for one, will likely have to create 50 or so 1099s, currently I create 0. If this holds true across most of America, I’m betting the IRS will be hit with something like 3 billion forms (assumes out of the 25 million businesses in the US will need to send out 125 or so forms they would not otherwise had to and I’ll bet I’m way too conservative here). To be sure a lot of these will be electronically filed but a large percentage of that total will not and that’s going to be a lot of paper to scan – correctly. And I will see not less than 20 myself. What the hell am I supposed to do with them? I setup the business as an LLC just to avoid this crap.

    Reminds me somewhat of an incident I had with the local EPA years ago when I worked at a major University. We were updating our data annually with them in terms of laboratory changes and such (don’t recall exactly what it was about it was 20 years ago). The EPA guy said we were supposed to notify them of each and every change as it happened rather than giving them a “snapshot” of a point in time. I then said, that’s about 3000 pieces of paper a month, I can automate it, can you? (We tracked internally all of the changes as they happened…) He paused for a moment, and then said, how about sending me a summary report every 6 months instead… I agreed to do so. Great moments in bureaucratic madness…

  27. Small businesses just have to have a 1099 party every late january. Open a few twelve packs and start filling out 1099s by hand instead of using software. In fact just fill out one line only of the 1099 in hand and use the software for the rest. Party on.

  28. Great article. Thanks for the info, it’s easy to understand. BTW, if anyone needs to fill out a , I found a blank form here.

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