Neil deMause

The 1099 tax form mess continues, with both the House and Senate moving to pass repeal bills. Unfortunately, the Senate’s solution for filling the resulting revenue gap is to promise vaguely to find unneeded spending it can cut; the House’s is to raise low- and middle-income earners’ health insurance premium costs; and the whole thing might still fail if the two sides can’t agree on a compromise:

There’s one legislative issue lawmakers on both sides of the aisle overwhelmingly agree on: The onerous 1099 tax-reporting mandate that snuck into the health-care reform bill has to be repealed.

The Republicans promised to eliminate it in their Pledge to America, and President Obama did the same in his State of the Union address. So nearly one year after its passage, why isn’t the law dead yet?… [read more]

A multi-year campaign to require that all employees in New York City receive paid sick time (which I first wrote about last fall) was quashed in October by city council speaker Christine Quinn. What happened, and what does it mean for worker rights and the city economy?

Last winter, it seemed all but inevitable that New York City would become the latest city to pass a law mandating that all city businesses provide paid sick leave to their employees.

A coalition of worker-rights groups, including Make the Road New York, the Working Families Party and the legal advocates A Better Balance had lined up to push for the legislation; a veto-proof majority of 37 city councilmembers had not just endorsed but co-sponsored a bill that would require at least five days of annual leave for all workers. And with the nation in the grip of swine-flu panic, visions of restaurant cooks showing up sick for work had even some small business owners admitting that some kind of sick-leave law was probably inevitable… [read more]

For anyone wondering whether Obama’s reported plan to give lots of investment tax breaks to businesses is really that bright an idea, Robert Reich today gives a resounding “no way, no how“:

The economy needs two whopping corporate tax cuts right now as much as someone with a serious heart condition needs Botox.

The reason businesses aren’t investing in new plant and equipment has nothing to do with the cost of capital. It’s because they don’t need the additional capacity. There isn’t enough demand for their goods and services to justify it. Consumers aren’t buying because they’re trying to come out from under a huge debt load, including mortgage debt; they have to start saving because their nest eggs are worth substantially less; and they’ve lost or are worried about losing jobs and pay.

For those who’ve followed the world of corporate subsidies, this should be a familiar refrain: It’s the but-for question, stupid! When considering whether to subsidize economic development of any kind, the first question needs to be: Would the development happen anyway without the subsidy? Obama’s investment tax credit fails this first test, says Reich: Businesses will take the credit for investments they’d make anyway, but nobody’s going to build a factory to build crap they can’t sell just because they can get a tax credit for it.

So what we’re likely to see if this passes is the government handing out lots of money for spending that would have happened anyway, but not much else. At best, it might get some companies to shift some spending from early 2012 to late 2011 to take advantage of the tax credit, much like everyone rushed to buy houses back in April to get in under the gun for the homebuyers tax credit. And we see how well that worked out.

It always feels icky to hand out tax breaks to big businesses when tons of regular folks are losing their jobs and their homes. In this case, it’s not just ick-worthy, but lousy economics, too.

Programming note: I’ll be on WTOP radio in Washington, D.C. this afternoon at 2:20 pm Eastern time, to talk about the Great 1099 Tax Form Mess. Tune in via webstream here.

With the Great Blizzard of 1099s still looming (if 2012 counts as “looming”), there could be a white knight riding to the rescue … would you believe the IRS?

With a new mandate looming that will require business owners to file millions more tax forms, the Internal Revenue Service has begun the daunting process of figuring out how to turn the law’s sweeping demands into actual rules for taxpayers.

The new regulations, which kick in at the start of 2012, require any taxpayer with business income to issue 1099 forms to all vendors from whom they purchased more than $600 of goods and services that year. That promises to launch a fusillade of new paperwork: An estimated 40 million taxpayers will be subject to the requirement, including 26 million who run sole proprietorships, according to a report released this week by National Taxpayer Advocate Nina Olson… [read more]

Still more on those changes to 1099 tax form filings for small businesses and the self-employed:

The massive expansion of requirements for businesses to file 1099 tax forms that was hidden in the 2,409-page health reform bill took many by surprise when it came to light last month. But it’s just one piece of a years-long legislative stealth campaign to create ways for the federal government to track down unreported income.

The result: A blizzard of new tax forms that the Internal Revenue Service will begin rolling out next year… [read more]

Okay, maybe the crazy right-wingers who think the health care reform law will bring about the end of civilization have a case after all:

NEW YORK (CNNMoney.com) — An all-but-overlooked provision of the health reform law is threatening to swamp U.S. businesses with a flood of new tax paperwork.

Section 9006 of the health care bill — just a few lines buried in the 2,409-page document — mandates that beginning in 2012 all companies will have to issue 1099 tax forms not just to contract workers but to any individual or corporation from which they buy more than $600 in goods or services in a tax year… [read more]

If you’d like to hear me natter about the health care bill’s effect on small business, I’ll be on WOC-AM in Iowa at 8 am (Central time) tomorrow morning, available here streaming over the interwebs. I’ll also be be on KMED-AM 20 minutes later (6:20 am Pacific), but that doesn’t appear to be streamed, so you’ll either need to live in Medford, Oregon, or have a tin can with a really, really long string.

Now that Congress has pulled an all-nighter and finally passed a health care reform bill (or half of one, anyway), I did the same to provide a look at what the new law will mean to you — assuming you’re the owner of a small business, which might actually describe one or two of my readers here.

The sweeping health-care bill passed by the House of Representatives Sunday, and now headed for President Obama’s desk, promises a sea change in the way that small business owners purchase and provide health insurance for themselves and their employees.

But many of the provisions won’t kick in until 2014 — and the final rules could still be changed by amendments that will now be considered by the Senate… [read more]

I check in on the state of microlending projects in Haiti, and how they will fare in the post-earthquake economy:

As Haiti continues to dig out from the earthquake that leveled Port-au-Prince, local microlenders are gearing up to begin rebuilding the country’s shattered economy.

International aid groups have been “focusing on supplying food and shelter,” says Daniel Jean-Louis, a business professor at the State University of Haiti and Quisqueya University who also works as a consultant for local business groups in Port-au-Prince. “Nobody has talked yet about businesses resuming and people getting back to work.”… [read more]