Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011

Mr. Speaker, pursuant to House Resolution 129, I call up the bill (H.R. 4) to repeal the expansion of information reporting requirements for payments of $600 or more to corporations, and for other purposes, and ask for its immediate consideration.

Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their remarks and include extraneous materials on H.R. 4.

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

Today the House considers H.R. 4, legislation repealing one of the job-killing tax increases enacted in the Democrats' health care law last year. This legislation provides a pathway to achieving a goal that is shared by Republicans and Democrats in the House and Senate alike, and by the Obama administration--repealing the form 1099 reporting requirements enacted last year.

Before I get into the details of H.R. 4, I would like to take a moment to recognize and commend my colleague and friend, Congressman Dan Lungren of California. He first brought this issue to light, and through his hard work we are here today to vote on a bill that has enjoyed strong bipartisan support.

We have been here talking about 1099s before. Some have even gone so far as to say there seems to have been 1,099 votes to repeal 1099s. While we have attempted in the past to repeal this misguided feature of last year's health overhaul, today we turn a corner and move H.R. 4 from the House to the Senate, so that it will hopefully soon be sent to the President for his signature. Only then will small businesses and families have certainty that they will not be buried under an avalanche of tax paperwork.

In 2010, as one of many ways to finance a trillion dollar health care law, tax information reporting rules were expanded. These new rules require businesses to issue a form 1099 for any payments to corporations rather than just individuals, and for any payments for property rather than just services or investment income that exceeds $600 over the course of a year.

This previously little-known provision quickly became an item of great concern to small business employers across the country. The National Federation of Independent Business, whose 350,000 members support H.R. 4, said this newly enacted reporting requirement would have a direct negative impact on small business.

Also brought forward by Mr. Tiberi of Ohio in September of last year, a form 1099 reporting requirement was expanded again to help pay for the small business lending law. This expansion treats the recipient of rental income from real estate as engaging in the trade or business of renting property. Unless repealed, families and individuals will be forced to fill out paperwork if they do something as basic as replace a refrigerator in an apartment they rent out. The National Association of Realtors, which supports H.R. 4, called this provision not only another paperwork burden but a trap for all small landlords.

Mr. Speaker, neither of these provisions reflects the wishes or needs of the American people. The most important issue on their minds is jobs. Let me say it again: jobs, jobs, and jobs. But despite the call for policies that can create a better climate for job creation, Congress has enacted policies that make this harder.

H.R. 4 will accomplish three goals. First, the legislation repeals the expanded 1099 reporting requirements on small businesses. Second, it repeals the new 1099 reporting requirements for rental property.

Third, it protects taxpayers by recovering overpayments of taxpayer- funded government subsidies.

What that means, and I know we are going to hear a lot about it from the other side today, is that if this bill passes, anyone earning more than 400 percent of poverty, nearly $95,000 for a family of four in 2014, and who is ineligible for the exchange subsidies under the 2010 health care law will be required to pay back all, not just some, of the improper payments. I would like to note that this is the same level Democrats used in the original law enacted last March.

For those earning less than 400 percent of poverty, the level of repayment of those overpayments is also increased. This is similar to the path taken by Democrats in December when they adjusted the repayment amounts as a way to finance the so-called ``doc fix.''

Now, I noticed yesterday that there was a lot of huffing and puffing on the floor about alleged tax increases in H.R. 4. I want to be sure to clear up any confusion on this point.

The Joint Committee on Taxation says in its score that in addition to a $20 billion spending cut, there is a $5 billion increase in revenue to the government from this one provision. But that doesn't mean people are necessarily paying more in taxes. Now, how is that possible? Simple. According to the nonpartisan Joint Committee on Taxation, under the better enforcement rules of H.R. 4, some people won't go into the exchange to accept a taxpayer-funded subsidy because they would be required to pay a larger share or, in some cases, all of the subsidy back under H.R. 4. Paying back money you weren't entitled to is not a tax increase.

For example, under current law, a household making $105,000 might think it's worth understating its income, or at least not updating their income information, in order to receive a $12,000 exchange subsidy because they would only have to pay back $3,000 if caught; but the household is less likely to do so under H.R. 4 because it would have to pay back the entire subsidy given there was no eligibility for the subsidy in the first place.

So let's be clear here. Voluntarily choosing not to enroll in government health care and thus foregoing the associated tax subsidies that one may not be eligible for might result in more government revenue, according to the Joint Committee on Taxation. But that is not a tax increase.

H.R. 4 is endorsed by more than 225 organizations, including the American Farm Bureau, the U.S. Chamber of Commerce, the American Osteopathic Association, and Americans for Tax Reform. Grover Norquist of ATR wrote he was especially pleased about the repeal of the 1099 provisions and the bill is ``a net tax cut.'' That's because despite the claims to the contrary, H.R. 4 reduces Federal spending by nearly $20 billion over the next 10 years. It also reduces the deficit by $166 million over that same time. That's probably why the bill is supported by Americans for Prosperity and the National Taxpayers Union as well.

Mr. Speaker, today we have the opportunity to come together and advance a bill that is a win for small business, a win for families, and a win for taxpayers across America. Cast a ``yes'' vote for H.R. 4 and give them that win.

Supporters of 1099 Repeal (as of 3/2/11)

[Committee on Ways and Means]

Aeronautical Repair Station Association; Agricultural

Retailers Association; Air Conditioning Contractors of

America; Alabama Nursery & Landscape Association; Alliance

for Affordable Services; Alliance of Independent Store Owners

and Professionals; American Association for Laboratory

Accreditation; American Bakers Association; American Bankers

Association; American Beekeeping Federation; American Council

of Engineering Companies; American Council of Independent

Laboratories; American Farm Bureau Federation ';

Americans for Prosperity; American Foundry Society; American

Hotel & Lodging Association; American Institute of

Architects; American Institute of Certified Public

Accountants;

American Medical Association; American Mushroom Institute.

American Nursery & Landscape Association; American

Osteopathic Association; American Petroleum Institute;

American Physical Therapy Association; American Rental

Association; American Road & Transportation Builders

Association; American Sheep Industry Association; American

Society of Association Executives; American Society of

Interior Designers; American Soybean Association; American

Subcontractors Association, Inc.; American Sugar Alliance;

American Supply Association; American Veterinary Distributors

Association; American Veterinary Medical Association;

Americans for Tax Reform; AMT--The Association For

Manufacturing Technology; Arizona Nursery Association;

Assisted Living Federation of America; Associated Builders

and Contractors.

Associated Equipment Distributors; Associated General

Contractors of America; Associated Landscape Contractors of

Colorado; Association of Free Community Papers; Association

of Ship Brokers & Agents; Association of Small Business

Development Centers; Automotive Aftermarket Industry

Association; Automotive Recyclers Association; Bowling

Proprietors Association of America; California Association of

Nurseries and Garden Centers; California Landscape

Contractors Association; Commercial Photographers

International; Community Papers of Florida; Community Papers

of Michigan; Community Papers of Ohio and West Virginia;

Computing Technology Industry Association; Connecticut

Nursery & Landscape Association; Council of Smaller

Enterprises; Direct Selling Association; Door and Hardware

Institute.

Electronic Security Association; Electronics

Representatives Association (ERA); Farm Credit Council;

Financial Services Institute, Inc.; Florida Nursery, Growers

& Landscape Association; Free Community Papers of New York;

Georgia Green Industry Association; Hampton Roads Technology

Council; Healthcare Distribution Management Association;

Hearth, Patio & Barbecue Association; Idaho Nursery &

Landscape Association; Illinois Green Industry Association;

Illinois Landscape Contractors Association (ILCA); Illinois

Technology Association (ITA); Independent Community Bankers

of America; Independent Electrical Contractors, Inc.;

Independent Office Products & Furniture Dealers Association;

Indiana Nursery and Landscape Association; Indoor Tanning

Association; Industrial Supply Association.

Industry Council for Tangible Assets; International

Association of Refrigerated Warehouses; International

Foodservice Distributors Association; International Franchise

Association; International Housewares Association;

International Sleep Products Association; Kentucky Nursery

and Landscape Association; Louisiana Nursery and Landscape

Association; Maine Landscape and Nursery

Association; Manufacturers' Agents Association for the

Foodservice Industry; Manufacturers' Agents National

Association; Manufacturing Jewelers and Suppliers of

America; Maryland Nursery and Landscape Association;

Massachusetts Nursery & Landscape Association, Inc.;

Michigan Nursery and Landscape Association; Mid-Atlantic

Community Papers Association; Midwest Free Community

Papers; Minnesota Nursery & Landscape Association; Motor &

Equipment Manufacturers Association; NAMM, National

Association of Music Merchants.

National Apartment Association; National Association for

Printing Leadership; National Association for the Self-

Employed; National Association of Federal Credit Unions;

National Association of Home Builders; National Association

of Manufacturers; National Association of Mortgage Brokers;

National Association of Mutual Insurance Companies; National

Association of Realtors'; National Association of

RV Parks & Campgrounds; National Association of State

Departments of Agriculture; National Association of Theatre

Owners; National Association of Wheat Growers; National

Association of Wholesaler-Distributors; National Barley

Growers Association; National Cattlemen's Beef Association;

National Chicken Council; National Christmas Tree

Association; National Club Association; National Community

Pharmacists Association.

National Corn Growers Association; National Cotton Council;

National Council of Agricultural Employers; National Council

of Farmer Cooperatives; National Electrical Contractors

Association; National Electrical Manufacturers

Representatives Association; National Federation of

Independent Business; National Home Furnishings Association;

National Lumber and Building Material Dealers Association;

National Milk Producers Federation; National Multi Housing

Council; National Newspaper Association; National Office

Products Alliance; National Restaurant Association; National

Retail Federation; National Roofing Contractors Association;

National Small Business Association; National Small Business

Network; National Sunflower Association; National Taxpayers

Union.

National Tooling and Machining Association; National

Utility Contractors Association; Nationwide Insurance

Independent Contractors Association; Nebraska Nursery and

Landscape Association; New Mexico Family Business Alliance;

New Mexico Nursery & Landscape Association; New York State

Nursery and Landscape Association; North American Die Casting

Association; North Carolina Green Industry Council; North

Carolina Nursery and Landscape Association; Northeastern

Retail Lumber Association; Northwest Dairy Association; NPES

The Association for Suppliers of Printing, Publishing &

Converting Technologies; OFA--An Association of Floriculture

Professionals; Office Furniture Dealers Alliance; Ohio

Nursery and Landscape Association; Oregon Association of

Nurseries; Oregon Nursery Association; Outdoor Power

Equipment Institute; Pennsylvania Landscape and Nursery

Association.

Pet Industry Distributors Association; Petroleum Marketers

Association of America; Plumbing-Heating-Cooling Contractors

Association; Precision Machined Products Association;

Precision Metalforming Association; Printing Industries of

America; Professional Golfers Association of America;

Professional Landscape Network; Professional Photographers of

America; Promotional Products Association International;

Public Lands Council; S Corp Association; Safety Equipment

Distributors Association; Saturation Mailers Coalition; SBE

Council; Secondary Materials and Recycled Textiles

Association; Self-Insurance Institute of America (SIIA);

Service Station Dealers of America and Allied Trades; SIGMA,

the Society for Independent Gasoline Marketers of America;

Small Business Council of America.

Small Business Legislative Council; SMC Business Councils;

Society of American Florists; Society of Independent Gasoline

Marketers of America; Society of Sport & Event Photographers;

South Carolina Nursery & Landscape Association; Southeastern

Advertising Publishers Association; Southeast Dairy Farmers

Association; Southeast Milk, Inc.; Specialty Equipment Market

Association; Specialty Tools & Fasteners Distributors

Association; SPI: The Plastics Industry Trade Association;

Start Over! Coalition; Stock Artists Alliance; TechQuest

Pennsylvania; TechServe Alliance; Tennessee Nursery &

Landscape Association; Texas Community Newspaper Association;

Texas Nursery & Landscape Association; Textile Care Allied

Trades Association.

Textile Rental Services Association of America; The

National Grange of the Order of Patrons of Husbandry; Tire

Industry Association; Toy Industry Association, Inc.;

Turfgrass Producers International; U.S. Apple Association;

U.S. Canola Association; U.S. Chamber of Commerce; United Egg

Producers; United Fresh Produce Association; United

Producers, Inc.; United States Dry Bean Council; USA Dry Pea

& Lentil Council; USA Rice Federation; Utah Nursery &

Landscape Association; Virginia Christmas Tree Growers

Association; Virginia Green Industry Council; Virginia

Nursery & Landscape Association; Virginia Technology

Alliance; Washington State Nursery & Landscape Association;

Western Growers Association; Western Peanut Growers

Association; Western United Dairymen; Window and Door

Manufacturers Association; Wisconsin Community Papers; Wood

Machinery Manufacturers of America.

I reserve the balance of my time.

I yield 2 minutes to the gentlewoman from Washington State (Mrs. McMorris Rodgers).

I yield myself such time as I may consume.

I would just like to say that the example the gentleman from New York cited, that if the family or individual honestly reported their income without this change that we are proposing today, they would still have to repay the entire amount of the subsidy to the government.

I submit for the Record a letter from Americans for Tax Reform that says this legislation is not a tax increase and is not a violation of the taxpayer protection pledge.

N.B. The following letter applies in full to House

consideration of H.R. 4, ``The Small Business Paperwork

Mandate Elimination Act of 2011.''--RLE, 03-02-2011

Americans for Tax Reform,

Washington, DC, February 24, 2011.

Hon. Dave Camp,

House of Representatives, Committee on Ways and Means,

Washington, DC.

Dear Chairman Camp: I write today to reiterate the support

of Americans for Tax Reform for H.R. 705, the ``Comprehensive

1099 Taxpayer Protection and Repayment of Exchange Subsidy

Overpayments Act of 2011.'' I also wish to clarify that H.R.

705 is a net tax cut, and is therefore not a violation of the

Taxpayer Protection Pledge.

Two bills in the last Congress (one of which was Obamacare)

greatly increased ``1099-MISC'' information reporting for

small employers, and introduced this reporting for the first

time to families renting out real property. These

requirements are unnecessary, onerous, and would lead to

major compliance issues--as the IRS itself admits. H.R. 705

repeals these two provisions, which is a victory for

taxpayers.

The official score of H.R. 705 from the Joint Committee on

Taxation (JCX-14-11) shows that this bill is a net tax cut.

By repealing the 1099-MISC provisions, taxes are cut by a

gross amount of $24.7 billion from 2011-2021. By requiring

erroneously-obtained Obamacare exchange credit advances to be

paid back by more recipients, JCT scores a dual effect from

the bill. Gross taxes would increase by $5 billion, and

spending (``outlay effects,'' as shown in footnote 2) would

be reduced by $19.9 billion.

Thus, the gross tax cut effects of repealing the 1099-MISC

reporting requirements are ``paid for'' by a small gross tax

increase and a large spending cut. Overall, the bill is a net

tax cut of $19.7 billion from 2011-2021.

Because no bill which is a net tax cut can possibly be in

violation of the Taxpayer Protection Pledge, the latter

simply does not apply in this matter. Americans for Tax

Reform has always followed JCT scoring methodology in this

area, including when JCT disaggregates between spending and

revenue effects of tax legislation. Spending cuts should

never be confused with tax increases, and JCT does a good job

pointing out when spending policy is present in tax bills.

Those trying to call this bill a net tax hike are simply

seeking to mislead the public, or cannot accurately read a

JCT score.

I encourage all Members of Congress to support this tax

cut/spending cut bill when it is considered by the full

House.

Sincerely,

Grover G. Norquist.

I yield 2 minutes to the gentleman from California (Mr. Herger), a member of the Ways and Means Committee.

I yield 2\1/2\ minutes to a distinguished member from the Ways and Means Committee, the gentleman from Kentucky (Mr. Davis).

I yield myself such time as I may consume.

I appreciate that language: to get back to what they tried to do in the first place. Let's look at what they did in the first place.

Their bill, their original bill, said anyone who earned more than 400 percent of poverty--that's $93,800 for a family of four--would be required to repay the entire amount of the exchange subsidy. That is exactly what this bill does. This bill does what the original health care legislation did. Then they raised it, and said, well, if you made up to $117,000 for a family of four, you had to repay the entire subsidy. They had a cliff in their bill, and there is a cliff now. What we are saying is we need to see that the American taxpayer is protected.

With that, I yield 2 minutes to a distinguished member of the Ways and Means Committee, the gentleman from Texas (Mr. Brady).

Mr. Speaker, I yield 4 minutes to the distinguished chairman of the House Administration Committee, the gentleman from California (Mr. Daniel E. Lungren).

I yield the gentleman an additional 30 seconds.

Mr. Speaker, I yield 2 minutes to a distinguished member of the Ways and Means Committee, the gentleman from Louisiana, Dr. Boustany.

Mr. Speaker, I yield 3 minutes to a distinguished member of the Ways and Means Committee, the gentleman from Nebraska (Mr. Smith).

Mr. Speaker, I yield 2 minutes to a distinguished member of the Ways and Means Committee, the gentlewoman from Kansas (Ms. Jenkins).

I yield 2 minutes to a distinguished member of the Ways and Means Committee, the gentleman from Minnesota (Mr. Paulsen).

Madam Speaker, I yield 2 minutes to a distinguished member of the Ways and Means Committee, the gentleman from Nevada (Mr. Heller).

At this time I yield 2 minutes to a distinguished member of the Ways and Means Committee, the gentlewoman from Tennessee (Mrs. Black).

I yield the gentlewoman an additional 30 seconds.

I yield 3 minutes to a distinguished member of the Ways and Means Committee, the gentleman from Ohio (Mr. Tiberi).

I yield 2 minutes to a distinguished member of the Ways and Means Committee, the gentleman from North Dakota (Mr. Berg).

I yield 1 minute to the gentlewoman from New York (Ms. Buerkle).

At this time I yield 1 minute to the gentleman from Mississippi (Mr. Nunnelee).

I yield 1 minute to the gentleman from Colorado (Mr. Gardner).

Madam Speaker, I yield 2 minutes to the gentleman from Florida (Mr. West).

Madam Speaker, I yield 2 minutes to the gentlewoman from Washington (Ms. Herrera Beutler).

I yield the gentlewoman 1 additional minute.

Madam Speaker, I yield myself the balance of my time. I can assure the Speaker that I will not be using all of the balance of my time.

There has been a lot of rhetoric today, and as this debate winds down and as we prepare to vote on this legislation, I urge my colleagues to look at the facts.

I think many of the arguments we've heard from the other side ignore reality. It ignores the reality of their own legislation--legislation that they've passed. It ignores the reality of their own votes.

Under the health care bill, you put cliffs in the bill, if we want to talk about cliffs. There are levels where people need to pay back the entire

amount of the subsidy they receive. In the original bill, that was at 400 percent of poverty. That is the level that is no legislation we see today. Later in December, when you wanted to address the doctor fix, you just moved that level up to 500 percent of poverty. There is still a cliff in the bill. There was a cliff in the original bill. There is a cliff now.

Also, this idea that repaying a subsidy to which one is not entitled is somehow a new concept was in the original health care legislation. It still is in the original health care legislation. We just believe we need to take further steps to protect the taxpayers.

And I would also say that if you look at the legislation, there is on page 123 a subpart (b) eligibility determination where applicants apply for the subsidy, and they're required to report certain things. But they're also required under this section to report changes in circumstances. That obligation is on the taxpayer, on the person seeking the subsidy. And that is in their legislation, and we think that's an important concept to protect.

Let's stick with the facts. The fact is the increased tax reporting requirements enacted last year will hurt our ability to create jobs. The 1099 provision hurts our ability to create jobs in this country.

Fact, the unemployment rate has been stuck at or above 9 percent for nearly 2 years, and this Congress owes it to the American people to do everything it can to help small businesses, job creators, and workers get back on their feet.

Fact, repealing the 1099 provision is a top priority of small businesses, and that's why we have over 225 organizations supporting this legislation, including the Nation's largest small business organization, the NFIB.

And, fact, this bill is a tax cut and a spending cut, and that's why it has the support of groups like the Americans for Tax Reform, the National Taxpayer Union and Americans for Prosperity.

Madam Speaker, I urge my colleagues to vote for this bill so small business can get back to what they do best: creating jobs.

I yield back the balance of my time.

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. 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).

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).

I yield 1 additional minute to the gentleman from New York.

I yield an additional 30 seconds to the gentleman from New York.

I yield 2 minutes to the gentleman from Rhode Island (Mr. Langevin).

(Mr. LANGEVIN asked and was given permission to revise and extend his remarks.)

Mr. Speaker, I have a parliamentary inquiry.

Does section 4 of H.R. 4 violate the rules of the House by proposing a tax increase?

The inquiry is regarding the underlying bill.

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. Speaker, I yield 20 seconds to my friend from New York (Mr. Crowley).

Mr. Speaker, I reserve the balance of my time.

Since the gentleman from New York has been unable to enter into a colloquy with the several gentlemen he has sought to, I yield 45 seconds to the gentleman from New York (Mr. Crowley).

After continuing to be amazed that the gentleman from Virginia somehow said that a tax increase is not a tax increase and is not germane, I am happy to yield 15 seconds to the gentleman from New York.

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.

I urge a ``no'' vote on the rule.

Mr. Speaker, I yield back the balance of my time.

Mr. Speaker, on that I demand the yeas and nays.

I thank the gentleman from Michigan (Mr. Levin) for yielding me this time.

Mr. Speaker, I rise in strong opposition to this bill not because I oppose the repealing of the 1099 reporting requirements. I do. I have a record of supporting 1099 repeal and relieving America's small businesses from onerous paperwork and onerous regulations. What I'm opposed to is paying for this small business tax bill by increasing taxes on working middle class Americans. And that is exactly what this legislation will do.

Let's not kid ourselves. Democrats offered a different path. Last July, we put forward legislation to repeal the 1099 reporting requirements, and we paid for it by eliminating loopholes in the Tax Code that reward those exporting U.S. jobs overseas. And, the Senate has offered an alternative path as well. Last month, they overwhelmingly passed a bipartisan repeal of the 1099 reporting requirement, which did not include a tax increase on middle class workers.

But my Republican colleagues in the majority here in the House, who have continually preached lower taxes, less regulation and fiscal discipline, have refused either of these alternative approaches. Instead, my Republican colleagues are forcing a vote today on H.R. 4, a measure that will impose a $25 billion new tax on middle class families. Yes, you heard that right. It is only 59 days since my Republican colleagues have assumed majority control of the House of Representatives, and they're already breaking their campaign pledge of no new taxes, a pledge that 234 of 241 sitting Republican Members of the House signed.

And, no, Republicans are not taxing the wealthiest 1 percent to pay for this small business relief bill. They are raising taxes on middle class workers, like firefighters, police officers, nurses and teachers, the very American families who work day in and day out to make their financial ends meet, the very American families under attack today in Wisconsin, in Indiana, in Ohio, and across the Midwest.

Now, the Republicans will not admit that embedded in H.R. 4 is a tax increase on the middle class. But the facts are the facts. The Joint Committee on Taxation says the Republican bill is a tax increase, citing how it will raise $25 billion in new revenue. That is congressional-speak for a tax increase. Even Grover Norquist, the author of the ``Taxpayer Protection Pledge,'' has said, ``Americans for Tax Reform has always followed Committee on Joint Taxation methodology.''

Yet, still my Republican friends deny and deny and deny. But, my friends, read my lips--Republicans are raising taxes. Just look at the contents of the bill. Under the Democratic health reform law, an American family of four earning $88,000 a year is obligated to pay no more than 9.5 percent of their income on health care premium costs. In this example, that is $8,360 that comes out of their pocket on a typical family policy valued at $13,000. So the family would pay, out of their pocket, $8,360 in annual premiums for their health care coverage, and the Federal Government would provide a tax credit--not a subsidy, not a subsidy, a tax credit--valued at $4,640 to cover the rest. These are not subsidies, but tax credits to working people. They work exactly like the child tax credit or the tax credit to make college more affordable.

How many of all of our constituents use those tax credits? Do they believe it is welfare, a form of welfare? I don't think so. They understand the difference between a subsidy and a tax credit. These are not subsidies for the middle class. They are tax credits for the middle class. These are tax relief measures for the middle class.

The Affordable Care Act also ensures that the Federal funding going towards a family's health premium is paid directly to the insurance carrier, to the insurance company, not to the family. In short, the family receiving this tax credit will never, ever personally touch that money, not a single dime do they feel. It never transfers through them.

However, under the Republican bill, H.R. 4, if that very same family that earns $88,000, the breadwinner of the family is called into the boss's office and the boss says: You know what, you're on your track to management. You're doing such a great job, we're going to give you a $250 bonus. Take the family out to dinner. It's the holiday season.

And you're overjoyed. You go back to your family and say, I am management material. I got a $250 bonus. I'm taking everybody out to dinner tonight.

Well, here's the rub: you would go from the 398 percentile of the Federal poverty level to the 401 percentile of the poverty level. When that happens, you would then owe the Federal Government for that $250. In April of the next year the Federal Government would say: Not so fast, you owe us $4,640 to make up for your having accessed those tax credits.

That's right, they would have to pay back every single dime that went directly to that health insurer, to that health insurance company when a dime never crossed their fingers. Not a single dime crossed their fingers.

Say it ain't so, Joe--that's what families back home in my district are saying. But I can't; it's true. Republicans are raising taxes.

The 1099 provisions should be repealed. I agree with that, but not on the backs of middle class workers and middle class Americans.

Thank you, Mr. Levin.

I am a bit disturbed as well about the description of the individuals we're talking about here, as though everyone is trying to scam the system.

I would just point out, in the bill H.R. 4994, which had bipartisan support last year--with every Republican but one--we passed it to eliminate the cliff and to eliminate the possibility of a massive increase in taxes on the middle class. So we have already addressed this. What your bill today will do is put that back in place.

I would just ask my colleague Mr. Camp:

What is it about the example I gave that's wrong? What is it about the example of a family of four, earning $88,000 a year? Based on their prior income taxes, they're eligible for the tax credits in the next year, assuming as they do, because they live a pretty dull life, a pretty hard life, trying to maintain their home, get their kids a quality education. Probably, at this point, maybe one of their kids is in college already; and by the way, they're probably accessing the Child Tax Credit, so they're used to taking tax credits.

Now this is one other additional tax credit that they can avail themselves of--to do what? Not to get the $4,460 and take it and go out and buy a car, not to get the $4,460 to go on vacation or to scam somehow--but to buy what? Health care insurance for their families, health care insurance, which is something we all would want to provide for our families.

What is it about this example? When they get the $250 bonus and they get pushed into the 400 percentile of poverty, that they now have to pay back their $4,460, what is it about my statement that's wrong? I haven't heard yet--because it's not wrong, because that family would be exposed to a massive tax increase, one that they cannot afford.

So don't describe these people as dishonest. Don't describe the middle class worker as trying to scam the system. Not everyone tries to do that. By the way, you might find that in the lowest poverty level, and I would dare say the top 1 percent try to scam the system, I would probably think, all the time. So let's not disparage anymore the middle class that we already have by presenting this bill this morning.

I thank the gentleman for yielding to me.

I wonder if my friend from Kentucky heard from his middle class taxpayers. I know he's heard from the small business owners. We've all heard from them. But has he heard from the middle class? When they get imposed this tax upon them, have they said, ``Don't put this tax on me''? No, because, quite frankly, they don't know what's happening. They wouldn't dream that you would do this to them. They wouldn't dream that somehow you might possibly inflict and impose upon them a $4,460 tax.

If your constituents earning $88,000 go over by one penny--one cent-- over the 400 percentile of poverty--one penny--they have to pay back $4,460, which they never ever physically touched, which they never received. It went to the insurance company. The insurance companies get taken care of. They get their money. They're fine. By one penny over the Federal poverty level, your middle class families have to pay back $4,460. Does that sound fair to you?

Now, maybe for one penny over, they have to give a little something back. Maybe for every dollar over, they'll have to give a little something back. But to pay back $4,460 so they can provide their families with health care? I'd

say to the boss, Do me a favor, don't give me the penny bonus. Don't give me the $250 bonus. Don't reward hard work. Don't reward me for doing good work because if you give me the bonus I'm going to have to pay $4,460.

Does that make any sense to you?

What about making pay work? What about asking Americans to do their jobs, to do them well; and if you do it well, you'll get a bonus, and you'll get ahead, and your families will be taken care of?

Under this bill, this is a nightmare for the middle class families--a nightmare--because they're not going to be able to pay that. It totally subverts the intention of what we tried to do in the first place, and that is to provide health care to the middle class.

I appreciate the comments of my friend from California, and I don't question his motivation. But I would suggest that if the assumption is that we believe everyone cheats, I think that's wrong.

What I hear from the other side--not from the gentleman from California, but generally from the other side--is that the belief is the middle class cheats; the middle class cheats, and that's why we have to impose this upon them. And I would use an example of a middle class business man or woman. That business man or woman who files an individual fax tax form as a small business person no longer will have to file the 1099 forms, but if they make $88,000 a year and they are 397 percentile of Federal poverty and they have an unexpected increase in income, they will be subject to the $4,460 middle class tax hike.

I thank the gentleman from Michigan for his yielding me the balance of the time.

I want to thank all my colleagues for coming to the floor today to defend the

middle class of this country. We all believe--and I think both Democrats and Republicans, it's been evident here today, all believe-- that the 1099 provisions need to be repealed. We recognize that.

We, too, want to help small business. We recognize that small business is the backbone of employment opportunity in our country. And that effort has been bipartisan, it has been bipartisan in the Senate, but not here. It's because we don't like the pay-for provision that my Republican colleagues are proposing and putting forward in this legislation because we believe that they switch the burden from the small business man and woman and they place it on the backs of the working class in this country.

We want to work in a bipartisan way. We believe we can work together and come up with a solution. Now I have to be honest, no one on the other side has asked me for a compromise solution, it hasn't happened. We passed this bill out of committee about 1\1/2\ weeks ago, almost 2 weeks ago, and still no one has said Joe, do you have an idea? We have a couple of good ideas over here I'd be willing to share with my colleagues on the other side, but that hasn't happened as of yet. I'm sorry this hasn't happened because I thought with this new Congress we would have more bipartisanship, and unfortunately that hasn't developed as of yet, at least as it pertains to this bill.

I'd also like to note that we're going on our third month here in the House of Representatives, and quite frankly I can't see much of what we've done. I can't say we've done much of anything, quite frankly. I can say that if you add up the total, we've imposed upon the American people an additional $80 billion in taxes in different various ways, the latest of which will be this $25 billion that we're going to impose upon the middle class if this bill passes today and somehow becomes law. This bill, if enacted, will be a massive increase of tax on the middle class.

I gave an example earlier today--it must have been about 2 hours ago--of a family of four earning $88,000, approximately 397 percent of the Federal poverty level.

And I mentioned if the breadwinner of the family, if the husband or his wife or either of the spouses is the breadwinner in that family, and they get a bonus of $250, I said before that they've done great work. They're management material. It's kind of laughable. ``Here's $250. Go out and buy the family a steak dinner.''

That $250 would bump them up to $88,250 which would place them at 401 percentile of the Federal poverty level, and it would expose that middle class family because of their $250 bonus to $4,460.

Not one, not a single Member of the majority--and we've had over 19 Members of the majority testify or give remarks on the floor this morning and this afternoon--not a single one has refuted or in any way questioned the example I've given. You have not refuted that example, which can only bring one to conclude that the example I have given is indeed correct. I don't want it to be correct, but indeed it is correct. And if it is correct, it means a tax, a tax on the middle class--one that they cannot afford, especially during these difficult times. We don't know when these tough times--when they will ever end for the middle class.

And I think it's shameful the way in which the middle class has been characterized on the floor, That somehow they are the folks that cheat the system, that they're the ones that can't be trusted. We're not talking about the rich. We can trust the rich. We know that.

And I don't like class warfare, but you know what? The truth is we've let the people at the highest percent get off with no shared sacrifice whatsoever. No sacrifice. Go on living your lives. We'll have two wars, you know, we'll increase the deficit. But don't worry. You all go on living your lives in mansions and don't worry about the rest of the country because it really won't affect you in the end. You'll always survive. You can always hire a police force to protect you. If you need health care, you can buy a doctor. If you need the garbage picked up, well, you know, sanitation won't pick it up anymore, but you can pay someone and they will cart it away. They're living in a glass house.

But the middle class, who are struggling so much, who are looking for some breaks, looking for an opportunity to afford health care for themselves and for their families--health care. They just want to be on an even plane somewhat of everyone else if they can afford health care.

And the Federal Government is not giving a handout. This is not a subsidy. This is not welfare. These are tax credits, like the college tax credit that many of our constituents afford themselves of. Like the child tax credit that many of our constituents afford themselves of. It's a tax credit to help them afford health insurance for their families. And they never touch the money.

It would be one thing if you said to me they got $5,000 in vouchers and they took the money and they went off and they bought plane tickets to Hawaii for the family for that year, or they took the money and they bought a new car, or they took the money and they bought furniture for their house. You know, that's scamming the system. That is wrong. That we don't promote.

But they never touch the money. The money goes to the insurance company. You know, the insurance companies who desperately need that money, they get the money. They're covered. They're fine. We don't ask them to be the watchdogs. We don't ask them to make sure the families are in compliance, make sure they're not going to go over their income levels. They get the money. They walk away. Wipe their hands of it. They're taken care of.

But it's the poor family that inadvertently, unbeknownst to themselves, goes over the limit, and they go over the cliff. And when they go over the cliff, it's at the tune of nearly $5,000 that they would have to repay.

Instead of rewarding success--which I hear from my Republican colleagues all the time, ``We need to reward success''--we're not doing it in this instance. What we are doing is we are taxing success, as my friend from Wisconsin pointed out. We are taxing success.

Often I hear about from my friends on the other side we need to encourage people to work hard, work harder, don't worry about the clock. Don't worry about the clock. Work harder, get ahead. And we should not be stopping that.

But here is a perfect example--and it's not coming from this side of the aisle; it's coming from that side of the aisle--of we're saying, you know what? Maybe you shouldn't work so hard. Maybe you should pay attention to the clock. Maybe you should make sure that when you file you're not tripping yourself up and unfortunately discouraging that family from getting health insurance because they're afraid they'll owe a new tax of nearly $5,000.

And I agree with my friend from Wisconsin again, this is nothing more than a Republican tax trap. It is a trap to the middle class. It's a trap to them. It's disparaging. And it's unfortunate that my colleagues have placed it in this light that somehow we're reducing or eliminating the burden for one group of workers and placing them on the backs of the middle class worker.

I don't begrudge the small businessmen and women. I was one myself before I came to Congress. I know the burdens. I understand the bills. I understand what comes in. But please don't remove the burden from the small businessman and woman and place that on the backs of middle class taxpayers. That's what you're doing.

If you vote for this bill, you will vote to increase taxes on the middle class. Don't kid yourselves. A tax on the middle class.

Thank you, Mr. Levin, I appreciate that.

It's a little interesting when we hear our friends come to the floor with the same talking points. My good friend from California talks about the government takeover of health care--which of course PolitiFact called the 2010 political lie of the year.

Allowing 33 million additional Americans to have access to----

Point of Order

. . .

I ask unanimous consent, Mr. Speaker, to withdraw the previous statement.

I appreciate the opportunity, because I want to be very clear about what I intended, what I thought I said and I think a review of the tape would reveal. I am not calling anybody a liar.

What I intended to say, and I will ask unanimous consent to put in the Record, is that as we have repeated talking points about a government takeover of health care, this has been judged by an independent journalistic undertaking as the political lie of the year.

I yield to the gentleman from California.

I apologize if the person who said ``government takeover of health care'' was not you. It is repeated so often by my Republican friends, including the Speaker of the House, time and time again, that sometimes I get confused because it is a litany that is used. It is in fact, and I would ask unanimous consent, Mr. Speaker, to put in the Record the PolitiFact article.

Because those words are still echoing in the Chamber. It has been said by somebody on the other side of the aisle earlier:

``PolitiFact editors and reporters have chosen `government takeover of health care' as the 2010 Lie of the Year. They chose it as the year's most significant falsehood by an overwhelming margin. The label `government takeover' has no basis in reality, but instead reflects a political dynamic where conservatives label any increase in government authority in health care as a `takeover.' ''

They point out: ``The law that Congress passed, parts of which have already gone into effect, rely largely on the free market. Employers will continue to provide health insurance to the majority of Americans through private insurance companies. Contrary to the claim, more people will get private health insurance. The government will not seize control of hospitals or nationalize doctors. The law does not include a public option. It gives tax credits to people who have difficulty affording insurance, so they can buy their coverage from private providers. It relies on a free market with regulations, not socialized medicine. We have concluded it is inaccurate to call the plan a government takeover because it relies largely on the existing health system of coverage provided by employers.''

Mr. Speaker, part of what we're seeing here, though, is this drama that is pulled out where talking points are repeated in an effort to obscure the facts going forward. The majority knows that the Democrats have attempted to adjust the 1099. We don't want it in there. We voted for fixes. It will be fixed between the House and the Senate.

What's killing small business is the crushing burden of health care, where they are trying to provide for their employees. What is killing small business is that they can't compete with big business. They have a system that has provided a downward spiral. What's providing the driving force for the government deficit is increasing costs of providing health care, for example, through Medicare. This used to be an area of bipartisan cooperation.

The Health Care Reform Act includes every significant area of reducing health care costs as either a pilot or a demonstration. It points a path towards saving hundreds of billions of dollars. Those used to be bipartisan.

Those used to be bipartisan; but instead of working with us to refine and accelerate the provisions, people are trying to put sand in the gears. And as my friends from Michigan and from New York have pointed out, there are going to be some--we hope they are unintended victims--but there are going to be innocent victims, people in the middle class and the near middle class who don't have the control of billionaire hedge funds to control their income.

There are things that can happen that will adjust it up or down. There

will be a significant penalty. We have worked to fix that cliff. We've approved it. We don't need to reinstate the cliff, the tax on honest mistakes. As has been pointed out, there are provisions to deal with fraud.

This is part of the drip, drip, drip to try and undermine health care reform, not accelerate it. It's a part of misrepresentation politically that the American public frankly doesn't deserve. It's a lost opportunity for us to reduce the deficit, improve health care, and lower costs.

This is very personal to people like me. I come from an area of the country that provides high-quality health care at a low cost. My people are penalized. Health care reform is moving to try to help people like that as we overall improve health care around the country and protect the deficit.

I am sorry for any ambiguity or misunderstanding from my comments, but I am frustrated when I hear the Republican side of the aisle continue to repeat this political lie of the year. It doesn't help the debate, it doesn't help us move forward, and we are going to have to move forward to solve the problems of this country.

[From PolitiFact, Dec. 16, 2010]

PolitiFact's Lie of the Year: `A Government Takeover of Health Care'

(By Bill Adair, Angie Drobnic Holan)

In the spring of 2009, a Republican strategist settled on a

brilliant and powerful attack line for President Barack

Obama's ambitious plan to overhaul America's health insurance

system. Frank Luntz, a consultant famous for his phraseology,

urged GOP leaders to call it a ``government takeover.''

``Takeovers are like coups,'' Luntz wrote in a 28-page

memo. ``They both lead to dictators and a loss of freedom.''

The line stuck. By the time the health care bill was headed

toward passage in early 2010, Obama and congressional

Democrats had sanded down their program, dropping the

``public option'' concept that was derided as too much

government intrusion. The law passed in March, with new

regulations, but no government-run plan.

But as Republicans smelled serious opportunity in the

midterm elections, they didn't let facts get in the way of a

great punchline. And few in the press challenged their

frequent assertion that under Obama, the government was going

to take over the health care industry.

PolitiFact editors and reporters have chosen ``government

takeover of health care'' as the 2010 Lie of the Year.

Uttered by dozens of politicians and pundits, it played an

important role in shaping public opinion about the health

care plan and was a significant factor in the Democrats'

shellacking in the November elections.

Readers of PolitiFact, the St. Petersburg Times'

independent fact-checking website, also chose it as the

year's most significant falsehood by an overwhelming margin.

(Their second-place choice was Rep. Michele Bachmann's claim

that Obama was going to spend $200 million a day on a trip to

India, a falsity that still sprouts.)

By selecting ``government takeover'' as Lie of the Year,

PolitiFact is not making a judgment on whether the health

care law is good policy.

The phrase is simply not true.

Said Jonathan Oberlander, a professor of health policy at

the University of North Carolina-Chapel Hill: ``The label

`government takeover' has no basis in reality, but instead

reflects a political dynamic where conservatives label any

increase in government authority in health care as a

`takeover.' ''

An inaccurate claim

``Government takeover'' conjures a European approach where

the government owns the hospitals and the doctors are public

employees. But the law Congress passed, parts of which have

already gone into effect, relies largely on the free market:

Employers will continue to provide health insurance to the

majority of Americans through private insurance companies.

Contrary to the claim, more people will get private health

coverage. The law sets up ``exchanges'' where private

insurers will compete to provide coverage to people who don't

have it.

The government will not seize control of hospitals or

nationalize doctors.

The law does not include the public option. a government-

run insurance plan that would have competed with private

insurers.

The law gives tax credits to people who have difficulty

affording insurance, so they can buy their coverage from

private providers on the exchange. But here too, the approach

relies on a free market with regulations, not socialized

medicine.

PolitiFact reporters have studied the 906-page bill and

interviewed independent health care experts. We have

concluded it is inaccurate to call the plan a government

takeover because it relies largely on the existing system of

health coverage provided by employers.

It's true that the law does significantly increase

government regulation of health insurers. But it is, at its

heart, a system that relies on private companies and the free

market.

Republicans who maintain the Democratic plan is a

government takeover say that characterization is justified

because the plan increases federal regulation and will

require Americans to buy health insurance.

But while those provisions are real, the majority of

Americans will continue to get coverage from private

insurers. And it will bring new business for the insurance

industry: People who don't currently have coverage will get

it, for the most part, from private insurance companies.

Consider some analogies about strict government regulation.

The Federal Aviation Administration imposes detailed rules on

airlines. State laws require drivers to have car insurance.

Regulators tell electric utilities what they can charge. Yet

that heavy regulation is not described as a government

takeover.

This year, PolitiFact analyzed five claims of a

``government takeover of health care.'' Three were rated

Pants on Fire, two were rated False.

Can't do it in four words

Other news organizations have also said the claim is false.

Slate said ``the proposed health care reform does not take

over the system in any sense.'' In a New York Times economics

blog, Princeton University professor Uwe Reinhardt, an expert

in health care economics, said, ``Yes, there would be a

substantial government-mandated reorganization of this

relatively small corner of the private health insurance

market (that serves people who have been buying individual

policies). But that hardly constitutes a government takeover

of American health care.''

FactCheck.org, an independent fact-checking group run by

the University of Pennsylvania, has debunked it several

times, calling it one of the ``whoppers'' about health care

and saying the reform plan is neither ``government-run'' nor

a ``government takeover.''

We asked incoming House Speaker John Boehner's office why

Republican leaders repeat the phrase when it has repeatedly

been shown to be incorrect. Michael Steel, Boehner's

spokesman, replied, ``We believe that the job-killing

ObamaCare law will result in a government takeover of health

care. That's why we have pledged to repeal it, and replace it

with common-sense reforms that actually lower costs.''

Analysts say health care reform is such a complicated topic

that it often cannot be summarized in snappy talking points.

``If you're going to tell the truth about something as

complicated as health care and health care reform, you

probably need at least four sentences,'' said Maggie Mahar,

author of Money-Driven Medicine: The Real Reason Health Care

Costs So Much. ``You can't do it in four words.''

Mahar said the GOP simplification distorted the truth about

the plan. ``Doctors will not be working for the government.

Hospitals will not be owned by the government,'' she said.

``That's what a government takeover of health care would

mean, and that's not at all what we're doing.''

How the line was used

If you followed the health care debate or the midterm

election--even casually--it's likely you heard ``government

takeover'' many times.

PolitiFact sought to count how often the phrase was used in

2010 but found an accurate tally was unfeasible because it

had been repeated so frequently in so many places. It was

used hundreds of times during the debate over the bill and

then revived during the fall campaign. A few numbers:

The phrase appears more than 90 times on Boehner's website,

GOPLeader.gov.

It was mentioned eight times in the 48-page Republican

campaign platform ``A Pledge to America'' as part of their

plan to ``repeal and replace the government takeover of

health care.''

The Republican National Committee's website mentions a

government takeover of health care more than 200 times.

Conservative groups and tea party organizations joined the

chorus. It was used by FreedomWorks, the Heritage Foundation

and the Cato Institute.

The phrase proliferated in the media even after Democrats

dropped the public option. In 2010 alone, ``government

takeover'' was mentioned 28 times in the Washington Post, 77

times in Politico and 79 times on CNN. A review of TV

transcripts showed ``government takeover'' was primarily used

as a catchy sound bite, not for discussions of policy

details.

In most transcripts we examined, Republican leaders used

the phrase without being challenged by interviewers. For

example, during Boehner's Jan. 31 appearance on Meet the

Press, Boehner said it five times. But not once was he

challenged about it.

In rare cases when the point was questioned, the GOP leader

would recite various regulations found in the bill and insist

that they constituted a takeover. But such followups were

rare.

An effective phrase

Politicians and officials in the health care industry have

been warning about a ``government takeover'' for decades.

The phrase became widely used in the early 1990s when

President Bill Clinton was trying to pass health care

legislation. Then, as today, Democrats tried to debunk the

popular Republican refrain.

When Obama proposed his health plan in the spring of 2009,

Luntz, a Republican strategist famous for his research on

effective

phrases, met with focus groups to determine which messages

would work best for the Republicans. He did not respond to

calls and e-mails from PolitiFact asking him to discuss the

phrase.

The 28-page memo he wrote after those sessions, ``The

Language of Healthcare 2009,'' provides a rare glimpse into

the art of finding words and phrases that strike a responsive

chord with voters.

The memo begins with ``The 10 Rules for Stopping the

`Washington Takeover' of Healthcare.'' Rule No. 4 says people

``are deathly afraid that a government takeover will lower

their quality of care--so they are extremely receptive to the

anti-Washington approach. It's not an economic issue. It's a

bureaucratic issue.''

The memo is about salesmanship, not substance. It doesn't

address whether the lines are accurate. It just says they are

effective and that Republicans should use them. Indeed,

facing a Democratic plan that actually relied on the free

market to try to bring down costs, Luntz recommended

sidestepping that inconvenient fact:

``The arguments against the Democrats'' healthcare plan

must center around politicians, bureaucrats and Washington .

. . not the free market, tax incentives or competition.''

Democrats tried to combat the barrage of charges about a

government takeover. The White House and House Speaker Nancy

Pelosi repeatedly put out statements, but they were drowned

out by a disciplined GOP that used the phrase over and over.

Democrats could never agree on their own phrases and were

all over the map in their responses, said Howard Dean, former

head of the Democratic National Committee.

``It was uncoordinated. Everyone had their own idea,'' Dean

said in an interview with PolitiFact.

The Democrats are atrocious at messaging,'' he said.

``They've gotten worse since I left, not better. It's just

appalling. First of all, you don't play defense when you're

doing messaging, you play offense. The Republicans have

learned this well.''

Dean grudgingly admires the Republican wordsmith. ``Frank

Luntz has it right, he just works for the wrong side. You

give very simple catch phrases that encapsulate the

philosophy of the bill.''

A responsive chord

By March of this year, when Obama signed the bill into law,

53 percent of respondents in a Bloomberg Poll said they

agreed that ``the current proposal to overhaul health care

amounts to a government takeover.''

Exit polls showed the economy was the top issue for voters

in the November election, but analysts said the drumbeat

about the ``government takeover'' during the campaign helped

cement the advantage for the Republicans.

Rep. Earl Blumenauer, an Oregon Democrat whose provision

for Medicare end-of-life care was distorted into the charge

of ``death panels'' (last year's Lie of the Year), said the

Republicans'' success with the phrase was a matter of

repetition.

``There was a uniformity of Republican messaging that was

disconnected from facts,'' Blumenauer said. ``The sheer

discipline . . . was breathtaking.''

I yield myself as much time as I shall consume.

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 minority, 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, while 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. That should be clear. The issue is not repeal. The issue is how you pay for that repeal.

The Senate has now voted to repeal 1099 and apparently the now majority does not like the pay-for in the Senate bill.

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. Mostly, it will be on families with incomes between $80,000 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, and Joint Tax projects that the average increase will be about $3,000.

Well, it's been said, it was said in our committee and then 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:

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.

It is 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.

``Specifically, H.R. 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, H.R. 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.''

Now, it was said yesterday at the Rules Committee that this is not a tax increase because it would become effective at a later date, 2014, when the subsidies under the health reform bill become effective.

Well, if you use that logic, we could, this 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, ``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.

I reserve the balance of my time.

I yield such time as he may consume to someone who has been leading the effort to repeal 1099 in a responsible way for the middle-income families of America, the gentleman from New York (Mr. Crowley).

I yield myself such time as I may consume.

There has been a reference here to taxpayers who did not honestly report their income. I must say that's an egregious misstatement. The way this works, or will work, is people will report their income honestly, and they do so based on their taxable income of a particular year.

The problem with this bill is if the income often unexpectedly goes up in a subsequent year, how much will the taxpayer be required to pay to the IRS. That's what the issue is. And as Mr. Crowley said, there are other programs where people report their income. They report it honestly, and then there is a change and the question is whether they should have to later pay some income tax to the IRS and, if so, how much.

What this bill does in its present form is to recreate a ``cliff'' which we smoothed out in previous legislation, and the cliff is 400 percent of poverty. And if unexpectedly you go over that amount in a subsequent year, essentially what this provision would say is that the middle-income taxpayer would have to pay far, far more in taxes in that subsequent year. And the burden would essentially be on middle-income taxpayers. That's undeniable. It would be on income from people who are honest, who are middle-income taxpayers.

So I hope no one will use the term ``ineligible'' or use the term ``dishonest.'' That's selling short the people of this country, the middle-income taxpayers.

And, indeed, the effort of 1099 was to make sure that smaller businesses and others reported accurately their income. That was its purpose. Now, it is clear that the way it was devised created all kinds of problems in terms of management of the small business, and so we moved to repeal it. But it is ironic that if essentially 1099 is now used by repealing it, when the effort was to have people honestly report their income, it would essentially penalize people, middle- income taxpayers, who honestly reported their income and became eligible for a tax credit.

Let me just in that respect read from Families USA: ``Unfortunately, H.R. 4 proposes paying for the repeal of the 1099 reporting requirement with a provision that would disproportionately harm middle class Americans. The Affordable Care Act protects individuals

and families who run the risk of having income that may bump them up over the eligibility limits for premium credits by capping the tax penalty they will owe if the monthly premium credit received during the year exceeds the amount of credit due based on unexpected changes in income or family status. This legislation would eliminate the safe harbor for middle-income families and would increase the cap for lower- income families by $500.''

And it closes, and again I'm quoting: ``Although we recognize that Congress needs to repeal the 1099 reporting requirement so that it is no longer a distraction from the way the Affordable Care Act benefits millions of small businesses, funds intended to help America's middle class families should not be used as a piggy bank to mend this legislative problem. We urge you to find an alternative and more responsible offset for this legislation that does not increase taxes on America's hardworking middle class families.''

Undeniably, that is what this legislation would do. It is middle class families who honestly reported their income, period.

There is a fraud provision in the act, which is a very stringent one, that covers the case of anybody who is dishonest; but what you're doing is penalizing middle-income families who were honest, honest, honest.

I yield such time as he may consume to the gentleman from New York (Mr. Crowley).

I yield such time as he may consume to the gentleman from New York (Mr. Crowley).

Mr. Speaker, before I yield to the gentleman from Wisconsin, I just want to say three quick things.

It is such a misstatement for someone to come here and say ``even if they did not qualify.'' That is not correct. They qualified. So don't come here and say they didn't qualify. Essentially what you're saying is middle income taxpayers came and defrauded when the truth is they told the truth. And indeed there's a provision relating to fraud if someone were guilty of that. It allows for full repayment in cases of fraud, and there's a provision that imposes a civil penalty up to $25,000.

The last thing before I yield, I want to make clear, last December, we fixed, Mr. Camp, the cliff. You voted for it. It was 409-2. I don't think you were one of the ``2.'' This resurrects the cliff, purely and simply, and catches hundreds of thousands of taxpayers in the future, middle income taxpayers.

I now yield 5 minutes to the distinguished gentleman from Wisconsin (Mr. Kind), an active member of our committee.

(Mr. KIND asked and was given permission to revise and extend his remarks.)

I yield the gentleman 2 additional minutes.

Mr. Speaker, before I yield to Mr. Blumenauer, I yield 30 seconds to the gentleman from New York (Mr. Crowley).

Mr. Speaker, I yield 5 minutes to the gentleman from Oregon (Mr. Blumenauer), a member of the Ways and Means Committee.

I yield myself 15 seconds.

The gentleman who just spoke voted ``no'' on repeal last July, as did the gentleman from California who spoke before him. You both had a chance to vote ``no,'' and you failed to do so. You didn't like a pay- for that closed a tax loophole.

I yield 5 minutes to the gentleman from Massachusetts (Mr. Neal), a distinguished member of the Ways and Means Committee.

I yield 1 additional minute to the gentleman.

I yield 2 minutes to the gentleman from California (Mr. Waxman), the ranking member of the Energy and Commerce Committee.

It is now my pleasure to yield 3 minutes to the distinguished gentleman from New York (Mr. Rangel).

(Mr. RANGEL asked and was given permission to revise and extend his remarks.)

I yield 3 minutes to the gentleman from New Jersey (Mr. Pascrell), an active member of our committee.

I yield the gentleman an additional 2 minutes.

I yield myself 15 seconds.

The gentleman from Ohio mentioned jobs, jobs, jobs. In a colloquial sense, this bill would do a ``job'' on middle-income taxpayers.

I now yield 3 minutes to a member of our committee, the gentleman from Texas (Mr. Doggett).

Madam Speaker, it is now my pleasure to yield 3 minutes to the gentleman from Louisiana (Mr. Richmond).

Madam Speaker, how much time is there on each side?

I continue to reserve the balance of my time.

Madam Speaker, I reserve the balance of my time.

Madam Speaker, I continue to reserve my time.

Madam Speaker, I yield myself 1 minute.

One of the speakers on the majority side said that this was an effort to repeal health care piece by piece. That is clearly their misguided motivation. Here what they're trying to do is on the backs of the middle class of America. They don't defend the pay-for except by misrepresentation.

A tax increase is a tax increase is a tax increase on the middle class, on the middle class, on the middle class.

I now yield the balance of my time to the gentleman from New York (Mr. Crowley).