The Obama Administration yesterday backed down from its plan to tax the earnings on 529 savings accounts, a kind of saving account for higher education under section 529 of the tax code. At Bloomberg, Richard Rubin and...
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- Expanded 1099 Reporting Requirement Repealed Before Becom...
Expanded 1099 Reporting Requirement Repealed Before Becoming Effective
Congress this month repealed a part of the health care law signed by President Obama last year, which required businesses would have to report all transactions where they paid at least $600 for goods and services. The provision, which has nothing to do with health care, was included for the revenue it would raise (about $2 billion per year) and offset the bill's expenses. The revenue would come from transactions being reported to the IRS that right now go unreported and thus untaxed.
It's difficult to understate the enormous compliance costs associated with this provision, which might well have exceeded the revenue it would have raised. (Today being Tax Day, Art Laffer has a piece in the Wall Street Journal today highlighting the compliance costs associated with the individual income tax generally.)
The repealed 1099 provision, coupled with the postponement of the Medicare "doc fix" are already driving up the net cost of the health care law, even before its largest components take effect. The lost revenue from the provision is being made up by reducing expected subsidies to be paid out under the bill. While President Obama signed the 1099 repeal into law, he indicated that he would have preferred another revenue source.
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