More than 90 percent of all American employers are small businesses and they generate approximately 70 percent of the new jobs created in the United States each year. Small businesses are crucial to the American economy and account for a significant majority of new product ideas and innovation. Small business owners across the country want to invest in their firms and hire new workers, but instead they are bracing for costly government mandates and regulations.
Included in the new health care reform law that was signed into law last year is an onerous tax reporting provision, which will be an enormous burden to our nation's small businesses.
That is why the House of Representatives passed, with my strong support, bipartisan legislation which will protect small businesses, their employees and every American taxpayer by repealing this job-destroying provision, which is scheduled to go into effect in 2012. Specifically the burdensome provision, which will affect more than 37 million small businesses, expands the tax information reporting rules by requiring businesses to file a Form 1099 for any payments to corporations and for any payments for property that exceed $600 per year per payee.
This new requirement will impose a huge tax compliance burden on small businesses, forcing them to devote resources to tax filing instead of to business expansion and job creation. The National Federation of Independent Business (NFIB), a non-partisan organization representing small businesses, recently cited the devastating effect this provision will have on a small bookbinding business. This business would see an increase in 1099 filings from less than a dozen last year to more than 1,000. Like many small businesses, this particular bookbinding business does not have an in-house accountant and would have to consider hiring a part-time employee just to complete the forms. The owner said, "If I have to hire a part-timer, I don't want them filling out government forms, I want them to be binding books."
I am committed to finding real solutions to address our nation's unemployment crisis. With an unemployment rate above nine percent for 21 consecutive months, this monstrous accounting and paperwork burden will not provide any incentive to create jobs. It will only create additional costs for business owners, particularly owners of small businesses, reducing productivity and further stifling economic growth. The passage of the "1099 repeal" legislation will reduce taxes by nearly $25 billion over ten years and reduce the deficit by $166 million over that same time, while also sending a clear message to our nation's job creators that they can hire new workers and invest in their business with the confidence that costly new mandates and higher taxes are not on the way.