Senate to vote to repeal small part of health law

[April 05, 2011]  WASHINGTON (AP) -- Congress is poised to send the White House its first rollback of last year's health care law, a bipartisan repeal of a burdensome tax reporting requirement that's widely unpopular with businesses. Even President Barack Obama is eager to see it gone.

The Senate is scheduled to vote on the bill Tuesday. Republicans hope it is the first of many such bills, resulting in the entire health care law being scrapped. Democrats say the bill is part of an inevitable tinkering that will be needed to improve the health measure.

The bill, which passed the House last month, would rescind a tax filing requirement for businesses that would have been used to pay for part of the new health law. The provision would require millions of businesses to file tax forms for every vendor selling them more than $600 in goods each year, starting in 2012.

The requirement was projected to raise nearly $25 billion over the next decade by ensuring that vendors pay their taxes. Now, the money will be made up by changing another part of the health care law, requiring more families to repay tax credits designed to help them cover insurance premiums, if their incomes increase beyond certain levels.

Obama supports rescinding the filing requirement, even though it was included in the health care law he championed. He opposes the bill's method for making up the potential revenue, but has stopped short of threatening a veto.

Republicans said the filing provision is an example of what happens when lawmakers hastily patch together a massive bill like the health care overhaul, then vote to pass it without knowing everything that's in it. Lawmakers from both parties say the filing requirement could create a paperwork nightmare for businesses and the Internal Revenue Service.

"I hope this is the first of many successful health-spending-law repeal votes and that we can replace the law with the types of common-sense reforms that lower costs and encourage job creation," said Senate Republican leader Mitch McConnell of Kentucky.

Democrats passed the health care law last year with no Republican support, when they had majorities in both the House and Senate. Republicans took control of the House in January, following congressional elections in November.

"By removing this nonsensical obstacle to economic growth, the new Congress has an opportunity to show real support for our nation's job creators," said Sen. Mike Johanns, R-Neb., who sponsored the repeal bill in the Senate.

The Republican-led House voted earlier this year to repeal the entire health care law, a measure that has no chance of passing the Democratic-controlled Senate. The Republican plan now is to attack the law, piece by piece.

Businesses already must file Form 1099s with the IRS when they purchase more than $600 in services from a vendor in a year. The new provision would extend the requirement to the purchase of goods, starting in 2012.

The requirement would hit about 38 million businesses, charities and tax-exempt organizations, many of them small businesses already swamped by government paperwork, according to a report by the National Taxpayer Advocate, an independent watchdog within the IRS.

Obama acknowledged the requirement would "place an unnecessary bookkeeping burden on small businesses," according to a statement released by the president's budget office. The House voted 314-112 in early March to repeal the filing requirement.

Starting in 2014, the new health care law will provide tax credits to low- and middle-income families to help pay health insurance premiums, if they don't get insurance through their employers.

The credits will be paid directly to insurance companies throughout the year. The amount will be based on family size, premium costs and income, as reported on previously filed tax returns.

Under the law, if a family's income increases, and the family members no longer qualify for the tax credits, or qualify for a smaller amount, they would have to repay a portion of those tax credits when they file their federal tax returns. The bill being voted on Tuesday would increase the amount people would have to repay, generating a projected $25 billion over the next decade.

[Associated Press; By STEPHEN OHLEMACHER]

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