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Providing for Consideration of H.R. 4, Small Business Paperwork Mandate Elimination Act of 2011

Floor Speech

Location: Washington, DC


Mr. POLIS. Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, today the Republicans are breaking a promise that they made to the American people, a promise not to raise taxes. The new majority came in promising a growth agenda. Instead, under the guise of giving administrative relief to small businesses--relief that we all agree is necessary and the majority of this body last session voted to provide with a different way of paying for it--the Republicans are now increasing taxes on middle class Americans and punishing workers.

Mr. Speaker, my colleagues have also broken their promise to this body. The people's House was promised an open legislative process. Over and over, the leadership has told the American people they want to create an open process, create jobs, and lower taxes. Yet here we are debating the second closed rule of the week on a bill that calls out for new and better ideas, a bill that in its current form will increase taxes and punish employees.

We all agree that the 1099 reporting provision of the Affordable Care Act needs to be fixed. Just last Congress, we brought a bill to the floor to do that. H.R. 5982 would have repealed the 1099 requirements. But the measure failed because our Republican friends did not believe that ending incentives for companies to outsource jobs overseas, which is the way we paid for fixing this administrative burden at the time, would protect American jobs and wouldn't raise taxes on individuals. They didn't believe that that was the correct way to offset the legislation. Instead, in this Congress, they are seeking a tax increase on middle class families as somehow preferable as a way of paying for something we all agree is important rather than ending incentives to shift American jobs overseas.

Now, we won't get into an argument about semantics. There will be those who somehow argue that this is not a tax increase. Well, if it looks and smells like a tax increase, it is a tax increase. A tax increase by any other name would smell as bitter.

Indeed, under this bill, hundreds of thousands of American families will receive an extra bill from the IRS to the tune of $3,000, $5,000, particularly middle class families, families earning $80,000 a year and $90,000 a year. The heart of what makes up the American middle class face the largest tax increases under this bill.

This bill would raise taxes, harming workers that should be protected. As the Joint Committee on Taxation points out, the Republican proposal would increase taxes for a family of four by an average of $3,000 a year. And, yes, that is a bill from the IRS. That is taxes. T-A-X-E-S is what the Republicans are seeking to increase under this bill.

Let me give another real-life example. One of the issues we want to correct with regard to the 1099 bill and work with our colleagues on the other side of the aisle to find a good way to pay for, is that currently people who have rental property are going to be classified as being in the business of renting property, and being subject to additional paperwork under the 1099 provision. So this could be a family of four earning maybe $60,000 a year in salary; they earn another $20,000, $25,000 from a rental property. They work hard. They keep up that property. Maybe it was formerly a family home, or maybe they saved up over 10 or 15 years to buy it.

With the 1099 paperwork problem, we are saying hey, you put a new refrigerator for $600 in that rental home, you have to fill out additional government paperwork that makes you responsible for taxes on that, okay? That's what we want to save people from, Republicans and Democrats. We're saying: You know what, we don't want to burden that family. You make $60,000 a year, you're getting $20,000 from a rental property, we don't want you to jump through hoops to put a new refrigerator in your rental property.

But you know what? To that family, they say we don't want to do that extra paperwork, but if it's between that paperwork and paying a $5,000 bill to the IRS, I'll do the darn paperwork. I'll do the darn paperwork.

Who are we trying to help here? Who are we talking about helping? If they don't want the help, if this is actually harmful, who are we talking about helping?

According to Families USA, House Republicans wish to decimate what remains of the safe harbor that protects individuals and families from substantial tax penalties. The Affordable Care Act provides built-in flexibility to consumers and protects them by capping the tax penalty if the monthly premium credit received during the year exceeds the amount of credit due based on unexpected income or family status.

So again, how can unexpected or unplanned for income or family status change? It could be a bonus, it could be a raise at work, it could be a divorce, or it could be a marriage. There are a number of ways these things change and put people in a higher category where the IRS will be sending them, because of this bill, $3,000 to pay, $5,000 to pay. That's what American families are going to be on the line for.

These provisions of the Affordable Care Act recognize that forcing middle income individuals to repay the entire amount would dampen their willingness to sign up for insurance in the first place. It would penalize them if they found a new job, or penalize them if they received a raise. This process of reconciling the actual income versus tax credits is often called a true up.

Now, last December, as part our bill to prevent the SGR payment cuts from going into effect, we changed the true-up policy for the better. We converted it to a graduated income approach to protect those with middle income levels and enable us to ease away from the cliff that people face when they reach the 400 percent level.

Now, let's talk briefly about health care reform. I know there is a lot in health care reform that my colleagues on the other side of the aisle don't agree with, but I like to think there is some they do agree with as well.

One of the most important provisions of health care reform from a market perspective is the incentive it gave middle class families to work and get off of government health care. Let me explain.

Before this House and the country took up health care reform, there were many families that were right at the cutoff point for Medicaid, okay. Let's say they are earning $10 an hour. If they got a raise to $10.50 an hour, they might lose thousands of dollars in government benefits. And I've met constituents who've said this. They've said: Look, I'm earning $9.50 an hour. I can't even take a raise at my job. I can't work another 20 hours a week at a side job because I actually lose money. So the government was telling them they couldn't work harder. The government was telling them we're going to trap you into a cycle of dependency. The government was telling them if you earn any more money, we're cutting off your health care.

We replace that in the Affordable Care Act with something that I like to think has support from both sides of the aisles, and that is a sliding scale of reductions. So there is an actual incentive to get off of government health care, to get off of Medicaid, to better yourself and take that 50 cent raise, realizing you may not keep all 50 cents, you might lose a little bit. But, you know what, we're going to let you keep 30 cents of that, and 20 cents will go to decreasing your government benefits. And eventually you've weaned yourself off of government aid entirely and you're able to support health care. That is another misconception. It's not that people want to receive Medicaid or government health care; what they want is to be able to afford, to earn enough money to afford to have private insurance. That's the goal here. The Affordable Care Act helps them get there.

This would strip that provision back and provide a disincentive for families making $75,000, $80,000 a year, depending on the size of the family, to work harder.

America was built on a strong work ethic. We all, on both sides of the aisle, have a strong awareness of the market-based system we live in and the power of incentives. We should provide an incentive for middle class families to earn more, not earn less. Why do we penalize those who succeed? Why are the Republicans seeking to raise taxes on middle class families who are seeking to do a little bit better? We should encourage them to get that second home and make some rental income, to work another 10- or 20-hour-a-week job so they can send their kids to a good college. That's what this body should be discussing. Yet instead, we're about to present to the middle class in this country an enormous tax hike. Now to fund something we all agree, and that is why if this was an open process, as Republican leadership has repeatedly promised, we could come together around better ways to pay for it. Okay, you didn't like the way the Democrats proposed paying for it last year. And you know what, by the way, a lot of those pay-fors wound up in statute anyway paying for other bills, but let's work together to do that. Consistent with the cut-go proposal, let's make cuts in government expenditures somewhere to pay for closing this 1099 loophole. Let's not put it on the backs of middle class families earning $80,000, $90,000 a year, those who are least able to pay for a tax increase.

You know, I was proud to support the continuation for 2 years of the Bush tax cuts at the end of last year, and let me tell you why. I think it would be unthinkable to raise taxes on families making under $250,000 a year. Now, I supported letting them expire for families making over $250,000 a year. You don't take pleasure in that, but it was because I felt we needed to do that to close the deficit. We couldn't leave that revenue on the table. But I felt it was so important to make sure that families making $80,000, $90,000, $100,000 a year didn't get a tax increase that I was willing to support no tax increase for millionaires as well as part of the package.

And yet here we are in the third month of the Republican Congress with an enormous tax increase on those Americans who can least afford it, the very families who are making $80,000, $90,000 a year who form the backbone of the American middle class, facing a $3,000, $4,000, $5,000 tax increase because of the way the Republican majority has chosen to pay for what we all agree is a worthy cause: reducing paperwork for small businesses and home renters.

I reserve the balance of my time.


Mr. POLIS. Mr. Speaker, I yield myself 30 seconds.

This is not, as my colleague from Florida indicated, about fraud. The law has strong penalties for fraud already.

Now, there's agreement to close this extra paperwork on the 1099. What we are supporting is an open process that would allow the majority to work with the minority to find a way to pay for solving this increased administrative overhead without raising taxes on American families.

With that, I would like to yield 3 minutes to the gentleman from New Jersey (Mr. Pallone).


Mr. POLIS. I yield myself a minute to respond to my good friend, the gentleman from California.

I agree with much of what you said, particularly when you said we don't need a pay-for. I agree with you that to a certain extent the gains are illusory. Yes, they're used as a pay-for; yes, there's a shell game; yes, on paper it looks like so much money. There's times that you and I might both disagree with the CBO, for instance, and this might very well be one of those. But the answer, and I hope my friend from California agrees, is not instead of doing no pay-for or perhaps allowing an amendment under this rule that would allow us to eliminate the pay-for, the answer is not to raise taxes on the middle class.

With that, I yield 5 minutes to the gentleman from New York (Mr. Crowley).


Mr. POLIS. I thank the gentleman.

Mr. Speaker, I yield myself such time as I may consume.

Mr. Speaker, I think this is a question of how cleverly--or perhaps deviously--the majority party constructed the rules of the House with regard to a test as to whether presenting a family earning $80,000 a year with a bill for $3,000 from the IRS is a tax increase or not. It would take some pretty fancy tap dancing to say that a $3,000 or $4,000 bill from the IRS to a middle class family is not a tax increase. If it looks like a tax increase, if it smells like a tax increase, it is a tax increase. And it is contrary to the rules of the House to allow a tax increase in this kind of bill.

Now, I understand there's some fancy dancing and semantics around it, but I think the American people and the voters of this country have a great deal of common sense with regard to this matter. When you get a $3,000 bill from the IRS that you have to pay--and if you don't pay, as my colleagues on the other side of the aisle liked to point out during the debate on the health care bill, you could face going to prison--that's a tax increase. That's a tax increase.

What this bill does is tell hundreds of thousands of middle class families, particularly right on that cusp--we talk about this 400 percent of poverty rate, again, that's an arbitrary level, but it's a real level for families; it's X dollars. Now it depends on the size of the family and it depends on the State, but we're talking $80,000, $90,000 a year, right in that range. You earn, as my friend from New York pointed out, 250 bucks more, the IRS sends you a bill, $3,000, $4,000, $5,000; and if you don't pay it, you face going to prison.

I yield to the gentleman from New York (Mr. Crowley


Mr. POLIS. I yield myself such time as I may consume.

Look, in a climate of a fragile economic recovery, the last thing we want do is punish people for getting a raise or earning a few extra dollars by working an extra job.

Now, Mr. Speaker, this bill is intended to help small businesses, and that's something we all agree with. I ran a small business before I was elected to Congress, and there is great support from both sides of the aisle to making sure that we reduce the 1099 reporting requirements for small businesses and people who happen to have a rental home.

But this is a situation of thanks, but no thanks. Thanks for saying I don't have to fill out an extra form because I bought a $600 refrigerator for my rental property, but no thanks because you are giving me a $5,000 bill from the IRS.

This Republican proposal undoes a bipartisan agreement that passed overwhelmingly last Congress. Under this Republican pay-for, an average middle class family could find out in January that they have to come up with $12,000 by April to send to the IRS with their tax return, or they could face going to prison. An extra $100 in overtime here and a $500 holiday bonus there could send a working family towards tax court.

During the last Congress, the Republican Party complained of being left out of the process; and while we didn't always have an open rule, every major piece of legislation came to the floor under a structured rule. Members of both parties come to the Rules Committee and have their amendments vetted. Now, why aren't we through this rule offering the good idea that the gentleman from California (Mr. Daniel E. Lungren) offered? He said why don't we remove the pay-for from this bill and simply disagree with CBO and see if we can pass it on that ground? Why are we not allowing the amendment from my friend from New York, who offered an amendment that would repeal the middle class tax increase proposed in this Republican bill? The Crowley amendment would protect the middle class and maintain the bipartisan agreement that we had last year.

Mr. Speaker, we all agree that the 1099 provisions in the Affordable Care Act need to be addressed. There has been excellent points made in that regard from Members from both sides of the aisle, but this is not the way to do it, not on the backs of the middle class, not with a tax hike during a recession.

Republicans are proposing a substantial tax hike for the middle class. Not only is that bad policy, but it's also a violation of the pledge that many of them signed committing to oppose all tax increases. A tax increase is a tax increase. When you get a $3,000, or $4,000, or $5,000 bill from the IRS that you have to pay the IRS, it's called a tax increase. A tax increase. There is nothing else to call it.

No fancy dancing, no fancy words can change the fact that a bill from the IRS is a tax increase. And families making $80,000, $90,000 a year will receive substantial tax increases under the Republican version of paying for this bill.

Mr. Speaker, if we defeat the previous question, I will offer an amendment to the rule to make in order Mr. Crowley's amendment to the bill. That amendment simply says that nothing in the bill will apply if it would result in a tax increase on anyone whose income is less than 500 percent of the Federal poverty line.

Mr. Speaker, I ask unanimous consent to insert the text of the amendment in the Record, along with extraneous material, immediately prior to the vote on the previous question.


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