Washington, D.C. - Ways and Means Ranking Member Sander Levin (D-MI), in a speech on the House floor Thursday, criticized Republicans’ proposal to increase taxes on middle-income families to pay for the repeal of the 1099 provision.
KEY POINTS: “If this bill would become law, it would mean a tax increase for hundreds of thousands of middle-income taxpayers. … What this bill would do would be to saddle middle-income taxpayers in future years, pure and simple."
“Let me be clear by reading the language that's in the bill. And I quote, ‘If the advance payments to a taxpayer exceed the credit allowed by this section, the tax imposed by this chapter for the taxable year shall be increased.’ In clear, simple English. So let no one stand up here and say, it's not a tax increase when it is."
Rep. Levin’s full statement:
“Let's be clear what the issue is today. The issue is not repeal of this provision of 1099. We on this side not only favor repeal but all of us who were here last session voted for it. We voted to repeal it. It failed because only two people on the then-minority side voted for the bill. They didn't like the pay-for.
Mr. Camp mentions the NFIB. They supported our effort last year to repeal 1099. So again, the issue is not repeal, we have made that clear in the past. The effort to repeal was blocked on the Republican side last session. The reason they did not vote yes, they said, was because they did not like the pay-for. The pay-for closed tax loopholes. Closed tax loopholes. And they stood up and said, no, we can't vote for the bill because of that. Ironically, most of the loopholes closed in that effort have now become law. So that effort last year to block repeal essentially was to block the loophole effort that has now become the law of this land.
So that should be clear, the issue is not repeal. The issue is how you pay for the repeal. The Senate has now voted to repeal 1099. Apparently, the now-majority does not like the pay-for in the Senate bill. So what does this bill provide? Well, in very simple terms, in clear terms, in unmistakable terms, the pay-for is an increase on middle-income families. It increases how much they will have to pay to the IRS if their income increases over what was projected when they would have obtained health insurance.
Let me be very clear. The people were playing by the rules once the law became effective. It wasn't that they were ineligible. They were eligible. Period. So no one should say they were not eligible, that somehow they misled, that somehow they misrepresented.
Now these are middle-income families who would have become eligible playing by the rules. So this is a tax increase if this bill becomes effective -- on middle-income families in future years. And mostly it will be on families with incomes between $88,000 and $110,000. These are estimates. It can well be that a small increase in income beyond what was anticipated can lead to an increase by as much as $12,000. That's the amount that could be required in a check from the taxpayer to the IRS. They project the average increase will be about $3,000.
Well, it's been said in our committee and before the Rules Committee yesterday that it's not a tax increase. So let me be clear by reading the language that's in the bill. And I quote, ‘If the advance payments to a taxpayer exceed the credit allowed by this section, the tax imposed by this chapter for the taxable year shall be increased.’ In clear, simple English. So let no one stand up here and say, it's not a tax increase when it is.
Let me also, if I might, read from the Statement of Administration Policy that was issued yesterday. And I quote. ‘Specifically, HR 4 would result in tax increases on certain middle class families that incur unexpected tax liabilities, in many cases totaling thousands of dollars, notwithstanding that they followed the rules.’ I want to read it again. ‘Specifically, HR 4,’ and I quote, ‘would result in tax increases on certain middle class families that incur unexpected tax liabilities, in many cases totaling thousands of dollars, notwithstanding that they followed the rules.’
Now [Republicans] said yesterday at the Rules Committee that this is not a tax increase because it would become effective at a later date, in 2014, when the subsidies under the health reform bill become effective. If you use that logic, we could next year increase taxes for everybody by, say 5 percent, and that would not be a tax increase because it would be for a later year. In a word, if this bill would become law, it would mean a tax increase for hundreds of thousands of middle-income taxpayers.
Also, according to Joint Tax, it would have this effect. That about 266,000 people would not be covered with health insurance because of the provisions in this bill. So in a few words, what this bill would do would be to saddle middle-income taxpayers in future years, pure and simple.
What we should do is to go back and find a responsible way to pay for the repeal of 1099, and I close by the following paragraph from the Statement of Administration Policy. And I quote again. ‘The administration looks forward to continuing to work with the Congress on the repeal of the information reporting requirements in the course of the legislative process, including finding an acceptable offset for the cost of the repeal.’
What this bill would do would be to provide an unacceptable offset, one that would burden hundreds of thousands of middle-income taxpayers in our country. We should not do that, period."
