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Editorial: Fix the 1099 rule, the sooner the better

By   /   Monday, December 27th, 2010  /   Comments Off on Editorial: Fix the 1099 rule, the sooner the better

While restaurants and small businesses up and down the Central Coast are fuming about the need to send 1099 forms to their best customers, a fix for this foolish piece of the health care reform law languishes in the Congress.

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While restaurants and small businesses up and down the Central Coast are fuming about the need to send 1099 forms to their best customers, a fix for this foolish piece of the health care reform law languishes in the Congress.

It’s part of the stupidity with which we must put up with this political season. Democrats in Congress created this hidden tax on business because they needed to pick on a weak constituency — small business — to find $19 billion in savings.

But no sooner had the ink dried on the measure that everybody realized this was a job killer of the first order and with the economy stuck in low gear, nobody wants to kill a job. The GOP takeover of the House of Representatives and its gains in the Senate should have made repeal of the hated 1099 rule a first order of business for the lame duck session.

But that’s not the way things work in Congress. Democrats don’t like the idea of simple solutions so they attached the bill to a Christmas tree of legislation. Republicans smacked that one down as too pork-laden to pass, but that was a mere rationalization for their real reason for the smackdown — the GOP wants to kill the 1099 rule in the new Congress and then run a rhetorical victory lap.

Meanwhile, the IRS is doubting the $19 billion in savings will be anything more than fiction and the SBA has taken the position that the costs to small business really outweigh the benefits. Given that paying for the 1099 rule is pocket change on Capitol Hill, it could be paid for by simply not appropriating funds currently allocated for another program until the final costs are determined.

The best hope now is that the new GOP-led House will take up the 1099 issue, pass something simple and claim credit for doing it. We’ll give Speaker John Boehner & Co. kudos for spotting a bad piece of legislation and making political hay out of it.

But the bottom line is that the 1099 rule has to go — the quicker the better. We don’t really care who gets the credit as long as this long nightmare of paperwork for small companies comes to an end.

Having made the 1099 rule a big issue in the Business Times here at the end of the year, we’re going to take a break. Wake us when the nightmare is over.

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