Thursday debate in the House: Is 1099 repeal tax relief, or a tax hike?

Republicans, in contrast, say they are scaling back a subsidy that goes to families with income as high as 400 percent of the federal poverty level, and also note that these subsidies are not scheduled to be distributed until 2014. As House Rules Committee Chairman David Dreier (R-Calif.) said yesterday, “What this comes down to is returning an improper government subsidy, and that is not a tax increase.”

Thursday’s debate on H.R. 4, scheduled for two and a half hours, could get interesting because Republicans have already charged Democrats with hypocrisy on this issue, since they have supported the Republican plan to reduce health insurance subsidies before. Last year, in an effort to avoid cuts to Medicare reimbursement payments to doctors, Democrats supported a bill that would recapture all health insurance subsidies to families earning 400 percent above the poverty level.

“You can’t have it both ways,” House Ways and Means Committee Republicans said in a February statement. “If it was good policy in 2010, when Democrats were in charge, then why is it suddenly being called a tax increase?”

On Wednesday, Ways and Means staff said the White House was being “hypocritical” by mirroring House Democratic arguments that the pay-for is tantamount to a tax increase.

Republicans also note that Department of Health and Human Services Secretary Kathleen Sebelius last year supported this change to the law in the context of finding money to pay for a change to the Medicare reimbursement formula. Sebelius said last year that recapturing more insurance premium assistance to families earning multiples above the poverty rate is “making it fairer for recipients and all taxpayers.”

H.R. 4 would eliminate two separate 1099 reporting requirements. The first one, which has been well-publicized, was passed as part of last year’s healthcare law and would require companies and other entities to file 1099 reports to the IRS for all goods and services transactions valued at more than $600. The second was approved last year as part of the Small Business Lending act, and imposes similar requirements on property owners.

The House will convene at 10 a.m. to debate the bill for two and a half hours, and a vote on the bill is expected by the early afternoon.

— This story was updated at 9:55 a.m.