Senate Majority Leader Harry Reid is arguing that Democrats should accept IRS penalties on working- and middle-class health insurance consumers as the price of making one key tweak to the health care law.
“The 1099 is something we’re going to look at,” Reid said at his weekly Capitol briefing with reporters. “Me personally I like the House payfor better than ours, so we’ll have to see.”
As I reported Monday, many Democrats are worried Senate leadership won’t fight the House’s version of the so-called “1099 repeal.” That’s a tax provision in the health care law that will require businesses to report all transactions with vendors valued at over $600 to the IRS. It’ll also supposedly create a substantial paperwork burden for entrepreneurs and corporations, so there’s bipartisan consensus the provision should go. The question is how to pay for it, and now we know why so many Democrats were worried.
The Senate agreed to pay for it by rescinding billions of dollars in yet-to-be-identified discretionary spending. Reid prefers the House plan, which health care reformers and worker advocates really hate. They pay for 1099 repeal by requiring people who receive federal health insurance subsidies to reimburse the IRS with substantial penalties if they earn higher-than-expected compensation. This could amount to thousands of dollars if a family gets a pay hike that bumps them past the 400 percent of federal poverty threshold.
Most Democrats will buck Reid on this. But Republicans — who are still eager as ever to chip away at the health care law — will fight for the House position. The question now is whether they settle on something acceptable to both parties.
“We will repeal 1099, there is no question of that,” said Sen. Chuck Schumer (D-NY) at a press conference Tuesday. “We have one way to pay for it. The House has another, and now we’re putting our heads together and figuring out something that will find some common ground.”
