Op-Ed - Resist Burdensom Tax Provision

Op-Ed

By Senator John Cornyn

Published by the Austin American Statesman on September 15th, 2010

House Speaker Nancy Pelosi said earlier this year that Congress needed to pass the health care reform bill so the American people can find out what's in it. Texans have taken her up on her challenge, and thousands of our small-business owners do not like what they see. In addition to higher taxes and health care costs, many are outraged at a significant new administrative burden that falls particularly hard on small businesses.

The new health care law requires every business to report all payments in excess of $600 to the Internal Revenue Service on a Form 1099. That is not as big a burden for large corporations with lots of lawyers and accountants already on the payroll. But for small businesses it can be devastating.

I heard from one small-business owner in Austin named Kurt Summers. He runs a second-generation family business that provides and services generators for homes and businesses. He said he can't afford to hire employees to take on the new administrative burden, so that means reassigning existing employees from their current work of sustaining and growing the business.

Robert Mayfield is another Central Texas entrepreneur concerned about this provision. He runs five Dairy Queens and a Wally's Burger Express. He's worried that even if he does everything right, one of his 500 vendors will make a mistake and he'll have to file even more paperwork with the IRS to sort it out.

A warehouse owner in San Antonio is also not looking forward to a more intimate relationship with the IRS. Chuck Toudouze employs 27 people who help service grocery stores and other retail outlets. He says that the indirect costs and unnecessary complications of new tax provisions are often ignored, especially the fear, intimidation and anxiety associated with compliance with new federal regulations.

One small business owner in Houston is thinking about changing his purchasing decisions to avoid triggering the 1099 requirement. Eric Donaldson runs a full-service delivery and logistics company that's a second-generation family owned business. He says he's reconsidering sending clients donuts to thank them for their business, or taking them out to dinner. Thus he expects that the provision would take money out of the pockets of countless other small-business owners.

In Dallas, Mike Slaton runs a financial services company that many of his small-business clients would depend upon to generate all the new tax forms. He says the underlying rationale of the new provision disturbs him the most. As he put it, "Our government views all small business owners as crooked and dishonest."

Repeal of the onerous provision must be a priority for Congress. So I will join several of my colleagues to support legislation to do just that. We will stand with dozens of small-business owners, including many Texans, to help convince other senators that the little-noticed provision in the health care law is creating even more uncertainty and despair among our nation's job creators.

Repeal of the 1099 provision is only a first step to provide tax relief for America's job creators. We must avoid the $3 trillion tax increase scheduled to hit American businesses and families on Jan. 1. We must repeal the entire health care law with its half-trillion dollars in new taxes, and replace it with reforms that will bend the cost curve down. We must also reform the tax code to reward savings and investment, while reducing compliance costs. Keeping taxes and costs low will assure small-business owners that they are not the problem, but the solution to our stalled economic recovery.

Source