By Dan Danner
Washington, D.C. (April 18, 2011) – Every now and then, something really good happens in Washington, D.C. Every now and then, wrongs are righted and common sense prevails.
This month, there was a moment of logical resolution in Washington that didn’t make big headlines, but it should have because it was a major victory for America’s job creators: small-business owners.
On April 14th, President Obama signed a bill that repeals a small piece of the massive health-care reform law. The provision would have forced the nation’s small-business owners to spend an inordinate amount of time helping the IRS fill the so-called ‘tax gap’ – taxes that go uncollected for various reasons. By requiring every small business to file an IRS 1099 form for business-to-business transactions totaling $600 or more over the course of one year, the government hoped to catch enough otherwise-unreported revenue to contribute to payment for the colossal cost of the health-care law.
Talk about adding insult to injury. The health-care law had already injured small-business owners with requirements that promised to increase the cost of health insurance, when reducing that cost has been the No. 1 concern of the small-business community for years. The addition of a regulatory paperwork burden that would disproportionately impact the smallest firms was an added slap in the face.
The “1099 provision” was so illogical, and so burdensome, that it was quickly identified as a must-repeal not long after the health-care law was signed into law last spring. Everyone – from the president himself to congressional Republicans and Democrats – agreed that inclusion of this money-grabbing provision was an embarrassing gaffe and it simply had to go. The National Federation of Independent Business – the nation’s largest small-business advocacy group – bore down on Congress to make sure they followed through with their promises of repeal.
The ultimate demise of the wicked 1099 provision is great news, but it wasn’t quite a tidy story-book ending. It took Congress more than six months to get this simple job done. They lingered over it, savoring the repeal effort in a way that only a politician can, knowing that claiming credit for slaying this paperwork dragon would make for great campaign talking points down the road. The process was deliberately prolonged by casting multiple votes for symbolic bills before voting on a piece of legislation that actually guaranteed repeal.
Meanwhile, Main Street waited. And NFIB kept the pressure on.
And we did win. Washington did listen this time, and they need to keep on listening to small business. After all, no other sector of the economy has the power to put our country back on strong economic footing. Small businesses create two-thirds of net new jobs and generate roughly half of the privately-generated GDP.
The story of the 1099 provision was a reminder of two important facts. One: when left unchecked, government has a tendency to hurt, rather than help, America’s small businesses. Two: when the small business community says “enough!” politicians will listen. Sometimes we just need to shout it a little louder. And we are.
Dan Danner is president and CEO of the National Federation of Independent Business, which represents 350,000 small-business owners in Washington, D.C. and every state capitol.