Taxes

Politicians From Both Parties Agree That Filling Out Tax Forms Is a Pain In the You-Know-What

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And by talk, I mean, "speak Japanese."

Last month, a government panel led by Paul Volcker reported that Americans spend about $140 billion a year—or about one percent of GDP—on tax compliance. But rather than begin the process of cleaning up the tax code mess, President Obama and Democrats in Congress passed a new health care law that adds to the tax paperwork for small businesses. Once word got out, even some Democrats became nervous. And now, according to The New York Times, the provision may be headed for the chopping block:

To improve compliance, the law requires businesses to file a 1099 tax form identifying anyone to whom they pay $600 or more for goods or merchandise in a year. Businesses will also have to send copies of the form to their vendors, suppliers and contractors.   

Businesses denounce the requirement, and even the national taxpayer advocate at the Internal Revenue Service, Nina E. Olson, said the reporting burden might "turn out to be disproportionate as compared with any resulting improvement in tax compliance."   

The White House is nervous about a repeal, fearing that it could set a precedent for rolling back other unpopular features of the law. Moreover, the reporting requirement is expected to lead to a significant amount of revenue — $17 billion over 10 years — to help pay for the expansion of coverage and other health initiatives. It is unclear whether Democrats and Republicans can reach agreements on repealing the provision and on finding a way to offset the loss of money.

If there's any provision that seems most likely to get cut, it's the 1099 reporting requirement, which raises a relatively small amount of revenue at the cost of adding a major annoyance to an already onerous process. So I'd say the White House is probably right to be nervous about the possibility that it might go. The chances for repealing the entire bill are basically zilch in the near term; even if Republicans take over both the House and the Senate in November, and even if they actually decided that they had the stomach for taking down the whole bill, any repeal effort would eventually run into a presidential veto. But it's at least somewhat possible that if the 1099 provision goes down, Republicans in Congress could continue to chip away at the law bit by bit. And if they could gather even a bit of bipartisan support—as seems to have happened here, and as seems more likely now with Democrats finding that the law isn't helping them much politically—then Obama would have a much harder time saying no. Now, I don't think this is a highly likely scenario. But it's a lot more plausible than a straight-up repeal.

I first took a look at the 1099 requirement back in May.

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  1. Americans spend about $140 billion a year?or about one percent of GDP?on tax compliance.

    That’s quite a chunk of rent-seeking.

    1. Accountants: the lawyers (read: parasites) of the tax world.

      1. Don’t hate the playa. Hate the game.

        1. It’s OK. He hates everyone.

  2. I’ll say this one more time (for now): it doesn’t matter what bullshit policy you talk about, until there is tax reform (or a tax revolt), it will be the same old crap in Washington.

    One. Simple. Consumption-based. Transparent. Tax.

    1. No,

      One. Simple. Pay-for-what-you-get. Tax.

      1. What possible motivation does the political class have for tax simplification? I think you could only argue “Fear”. I don’t expect to live long enough to see our politicians that afraid.

        1. The same motivation they have for everything else: getting elected. Or, if you will, the fear of NOT getting elected or re-elected.

        2. They will continue to get elected and re-elected by promising unicorns and rainbows, by pledging to “fight” for [fill in the blank], and by appearing on TV with their shirtsleeves rolled up.

          Hell, I don’t think I’ll live long enough to see even a candidate make tax simplification a significant part of his/her campaign.

  3. $600? Are these people insane? Everytime I buy a fucking computer I have to report it to the government? I have to 1099 Best Buy? The government will keep track of practicall every penny I spend?

    I know, I ask a lot of questions for someone from New Jersey.

    That is fucking insane.

    1. Don’t worry Greer. Once we eliminate greenbacks altogether(to save the trees of course) we’ll issue the mark of the beast to all and monitor all of your spending for you. Nobody will buy or sell without our knowing and nobody will escape paying their taxes.

    2. How are they going to institute a VAT without this kind of reporting?

    3. If you are a business, yes. Not to mention your rent and utility payments, your spending on office supplies and furniture, etc.

  4. Regarding the pic, to see if it’s a vaild tax deduction, the first thing you need to do is verify that ojii-san still has a pulse

    1. Yeah, this is easily the most hilarious occurrence in Japan’s pension system since they lost information on 50 million records, and around 10 million permanently. Yes, clearly their money is safer in government coffers where it can be spent on rural mega-bridges and then never returned because the pension system’s tens of thousands workers don’t actually do anything.

      On the plus side, I know some people who have avoided paying into it. Like politicians.

  5. “The White House is nervous about a repeal, fearing that it could set a precedent for rolling back other unpopular features of the law.”
    Well, we can “hope”….

  6. any repeal effort would eventually run into a presidential veto.

    This is easily over come.

    Write up the budget with the repeal attached and when Obama threatens Veto say that Obama is holding the economy and the US government hostage to his failed socialist health care boondoggle.

    In fact this very tactic is probably going to play out in the next 2 years anyway….and with health care not being even fully enacted it will probably be the primary choice of republicans to target.

  7. It’s amazing to me that even libertarians hold the assumption that taxes are a necessary part of society.

    Why is it that every other provider of services in our society gets paid with contractual fees, yet we still act like we are in the middle ages when the “problem” of how to fund government comes along?

    Saying we need taxes to pay for the government is like saying we need taxes to make sure Microsoft stays in business. Individuals can’t just pay for what they get from Microsoft, no, everyone needs to contribute, no matter what they get.

    What is wrong with everyone?

    1. How would you pay for the military without taxes? Does everyone get the choice of whether to voluntarily contract with the military for defense? If the Chinese invade, does the Army somehow protect my property because I paid my bill and not yours because you didn’t. Please stop being silly.

  8. There are no severability provisions in the health care bill, so plucking out individual provisions of the bill aren’t allowed. And modifying the 1099 reporting rules (as Ben Nelson as proposed) will probably result in a massive rewrite that will collapse under its own weight. After 20 state attorneys general make their arguments in Florida today, I hope this will fast track to the Supreme Court and will be found to be unconstitutional under the Commerce Clause.

    1. will be found to be unconstitutional under the Commerce Clause

      HAHAHAHAHAHA

      I wish it would, but a sensible interpretation of the commerce clause would destroy so many government boondoggles and hurt so many special interests that it’ll never happen.

    2. plucking out individual provisions of the bill aren’t allowed

      How is this legal? Congress can pass bills that later Congresses can’t change?

      1. “”Congress can pass bills that later Congresses can’t change?””

        Depends on the method of change. They could put change up for a vote, but I don’t think that’s what they are talking about. I think “plucking” in this case is the removing or modifying of law without a vote.

    3. Severability only comes into play when a court strikes down part of a law, not when Congress amends it. And in any case, the issue of severability is not so cut and dry- the absence of a severability clause doesn’t mean that the court has to strike down the whole law. In the recent SCOTUS case on SARBOX (which has no severability provision), the court struck down part of the law on the appointment procedures for the accounting board, but left the rest of the law standing.

  9. To recycle an old Dukakis joke to update it to the Obama kakistocracy:

    How does a Democrat define “take home pay”?

    Lost revenue opportunity.

  10. If the members of Congress were required, on April 14, to show up with their shoebox of receipts for the year, put in a locked room with only a calculator and a pencil and paper, and left there until they had completed their tax forms, we’d have a simple tax form the very next day.

  11. The Republicans should block any effort to repeal this provision. Let it come into effect, force all businesses to submit the paperwork, and watch the IRS become inundated. The resulting chaos and anger will bury the Democrats and Obamacare along with it. Let those who voted for this abomination live with the consequenses.

  12. For professional reasons I have to go to Cuba quite often. There they do exactly what you describe. We have an employee in the offie who is a great professional. If she was anywhereelse in the world she would be getting a good salary. In Cuba we have to pay the government $1000 per month for her and when they come around to send her share of it is only $50!!!!!!!! That?s where we teh US is heading.

    1. So she’s basically a slave to the Cuban government which rents her out and takes a 95% cut? Even the greediest pimps don’t do that well.

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