[Congressional Record (Bound Edition), Volume 157 (2011), Part 4]
[Senate]
[Pages 4510-4511]
[From the U.S. Government Publishing Office, www.gpo.gov]




                             REPEAL OF 1099

  Mr. MENENDEZ. Mr. President, later, as we move to the bill on small 
business, I will be offering, I hope, a second-degree amendment to the 
amendment offered by Senator Johanns, and I speak today on behalf of 
middle-class families and on behalf of small businesses.
  I wish to start by saying that I fully support--as I have already 
done in a series of votes--repealing the 1099 reporting requirement, 
but I strongly believe we have to do so in a manner that does not--does 
not--increase the burden on our small businesses and employees. The 
amendment of Senator Johanns certainly helps only small businesses 
through the repeal of the 1099 provision, but--and this is less well-
known--I believe it actually hurts small business employees. It is a 
double-edged sword. The Johanns amendment risks driving up health 
insurance costs and cutting health insurance coverage for small 
businesses.
  As you know, the affordable care act provides tax credits to families 
who earn under $74,000 per year to help them purchase health insurance. 
Those tax credits are set at the start of the year. At tax time, when 
families actually report their annual income, the tax credits are 
reconciled with their annual household income to ensure they receive 
the correct amount of assistance. But because income and other family 
circumstances can change during the course of a year, individuals might 
end up getting excess tax credits even though the amount of the payment 
was correct at the time.
  For example, a family with an unemployed worker who secures a job at 
a small business midway through the year--and, hopefully, can do so, as 
we continue to work on this economy to have it grow--has rightfully 
received a tax credit while unemployed but could face a stiff tax hike 
to repay the amount of the subsidy because the family's annual income 
ends up higher for the second half of the year. This family received 
the correct amount and did nothing wrong. Let me say that again. These 
individuals did nothing wrong. While unemployed, these individuals 
needed those tax credits to be able to get health insurance. That is 
why we passed this reform, to help those very same middle-class working 
families in need.
  Now, under current law, we provide a reasonable repayment requirement 
if the tax credit an individual receives exceeds the amount they should 
have received because of unexpected changes in income or family status. 
We don't give them a pass, but we don't expect all families with an 
annual income of $70,000 to have $10,000 in savings to pay the surprise 
tax bill they will get in April, either. So we set caps on what they 
would have to pay back depending on what they earn. The Johanns 
amendment makes harmful changes to these repayments for middle-class 
families. Under the Johanns amendment, some families could have to pay 
back as much as $12,000 in some cases, and that is too high a price. We 
shouldn't ask small business employees to take that much of a hit. They 
are the ones who are going to the exchanges to purchase coverage. They 
are the ones working for the mom-and-pop shop that doesn't offer 
coverage.
  My amendment isn't about these families alone, however, as difficult 
a situation as they may be in. This amendment is about what the Johanns 
offset could do to health care costs and coverage for small businesses 
and for those who make their living from small businesses. This risky 
offset could drive up premiums and force more individuals to refuse 
coverage. We are not talking about paying back tax credits; we are 
talking about driving up the costs on families and small businesses, 
many who have never even taken a tax credit to begin with.
  My amendment would simply direct the Secretary of Health and Human 
Services to decide the offset in the Johanns amendment and determine 
its effect on small business. What is so wrong about that--determining 
its effect on small business? We are trying to help small businesses by 
eliminating the 1099 provision. Let's make sure we continue to help 
them and not put extra costs on them. Specifically, we want to 
determine whether there is an increase in health insurance costs or a 
decrease in health coverage for small businesses. If the study finds 
either, then current safe harbor provisions would remain in effect--the 
same safe harbors we supported in the SGR bill, or the doc fix, in 
December.
  Passing 1099 would not be affected. That would move forward. So the 
claim that somehow, ultimately, 1099 wouldn't be eliminated is false. 
The 1099 would not be affected. That would move forward. We would 
eliminate that responsibility from small businesses. So you can be both 
for my amendment and the Johanns amendment because it would still 
repeal 1099.
  Let me make it clear. We all want 1099 repealed, and I have voted in 
a series of ways to do exactly that. My amendment does not in any way 
affect or delay the repeal of 1099. The only potential change my 
amendment makes would be to the risky offset in the underlying 
amendment and only if this study finds that it actually hurts small 
businesses.
  My colleagues on the other side of the aisle have come to the floor 
arguing that a study would simply delay repeal of 1099; that further 
studying this risky offset would prolong the 1099 issue; that if we 
just passed the amendment without protecting small businesses, this 
bill can go right to the President. Well, we have actually

[[Page 4511]]

passed 1099 repeal already and shown we have the votes necessary to 
make this become law. It is not going to the President to become law in 
this bill because this bill hasn't even cleared the House.
  At the same time, I have heard no mention of what this offset could 
do to small businesses and their health care costs--not one word. I did 
hear that further studying the impacts it may have on small businesses 
would only delay repeal of 1099. A simple read of my amendment would be 
enough to know that is incorrect. My amendment directs a study to be 
done after--after--repeal of 1099 is signed into law. Let me make it 
clear. Nothing in my amendment slows down repeal of 1099.
  My colleagues on the other side of the aisle are also trying to frame 
this debate as either you are for or against small businesses. But they 
are helping and harming them at the same time with the Johanns 
amendment. With this second-degree amendment, we can have a 
conversation about helping small businesses and ensuring that small 
business employees will not get hurt at the end of the day.
  Now, we haven't had the Joint Tax Committee determine a revenue score 
as yet, but it is important to point out that this amendment does not 
spend--does not spend--an additional dime. It simply protects small 
businesses from higher health care costs and coverage cuts.
  If there is any revenue score associated with it, that would only be 
due to the study finding that this offset drives up health care costs 
or drives down health coverage for small businesses. Would we not want 
to know that?
  We are all here supposedly arguing to try to enhance the opportunity 
for small businesses to have less burdens, to be able to grow, to be 
able to prosper, to be able to create jobs. Well, we certainly would 
want to know--we certainly would want to know whether this offset 
drives up health care costs associated with small businesses or drives 
down the health care coverage for small businesses.
  Why is anyone afraid of that? Why is anyone fearful of that? So to 
those who may consider opposing my amendment, think of this: On the one 
hand, if you do not believe this offset will hurt small businesses, 
there is no harm in voting for it because you believe the study will 
not show premium increases or coverage cuts. So the offset would remain 
in place. If you believe my amendment would have a revenue score, then 
you are assuming the offset hurts small businesses. It is one way or 
the other, not a gray area.
  The idea of protecting small businesses in this manner has precedent. 
I have a history working across the aisle to support small businesses, 
including cosponsoring a Republican amendment to the Wall Street reform 
bill which requires regulators to ensure new rules do not harm small 
businesses. We thought it was a good idea then to protect small 
businesses in the event new rules might unfairly impact them. I 
strongly believe we should come together now to protect small 
businesses if this risky offset drives up health care costs on small 
businesses or forces cuts in their coverage.
  I would just simply ask, who in the world, especially during these 
fragile economic times, would want to do anything that could raise 
costs on small businesses? Let's protect them and the 1099 repeal by 
supporting my second-degree amendment.
  Now, I listened to my colleague from Nebraska with whom I have worked 
on some bipartisan efforts on housing for the disabled. We get along 
very well. I respect him, and actually I supported 1099 repeal as one 
of the 20 Democrats who voted for his amendment in November and other 
issues such as housing for the disabled. So it is with some regret that 
we find ourselves in a different view.
  There have been questions raised about the sincerity of our 
opposition to the manner in which the offset is included in the 
Senator's amendment. The Senator from Nebraska says an almost identical 
offset was passed unanimously by the Senate just 4 months ago. I think 
our definitions of ``almost identical'' are very different.
  Yes, it is true we made changes in the payback tax to pay for the doc 
fix in December, but that provision was very different from the one we 
are debating today. The one today, unlike before, removes protections 
we included in December in the doc fix to protect families from 
unlimited tax liability which could be as high as $12,000. I mean, you 
are talking about taxing these families, through no fault of their own. 
What family of three making $74,000 annually, gross, can afford an 
unexpected $12,000 tax bill in April? I cannot think of many. But that 
is exactly what could happen under the Senator's amendment.
  That was not the case--not the case--in the provision that was 
enacted at the end of last year in the doc fix. We provided a phaseout 
that would have avoided this clip and thus tax shock on middle-class 
families.
  The Senator from Nebraska also said my second-degree amendment was 
just a delay tactic. That simply is not true. I and 80 of my colleagues 
have already passed 1099 repeal in the Senate this year. So to question 
our support for 1099 repeal would be misleading.
  My understanding is that the Johanns proposal is an amendment to the 
small business bill we are debating, which has not passed the House. So 
this amendment we are debating today would not go directly to the 
President for his signature. It still needs to go through the whole 
process of the House. We are not delaying anything in that regard.
  Finally, the only way there would be any revenue shortfall--I say to 
those who would make the assertion that our amendment creates a revenue 
shortfall, well, then, what you have to be saying, if you make that 
statement, is you believe the savings from the Johanns offset comes 
from increasing premiums and reducing coverage on those who earn it 
through making our Nation's small businesses run. That is not a 
proposition I think they want to assert.
  So I will come back to the floor later to offer this second-degree 
amendment. And because it works to both repeal 1099 and ensure there is 
not a tax on our small businesses and small business employees or a 
diminution of health care coverage, I am sure we will get the support 
of our colleagues.
  I yield the floor.

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