Uncle Sam Putting A Choke Hold On Your Small Business?

I’m pissed.  What in theory could have been a good thing — cost controls on health insurance, especially for small business — has turned into an absolute nightmare.

I’m sorry if you’ve come looking for another article on marketing and advertising — you’re not going to find it here.  In fact, this may be the first of many articles that discuss finance, politics, and the corruption of The American Dream as seen from the perspective of a modern entrepreneur.

It’s a big shift for me — all I’ve written about for years now is marketing, advertising, and entrepreneurship, and I’ve stayed well clear of the political realm.  But there’s just too much going on right now for me to sit silent, and too much for you to ignore it.

So mark this as my first of many articles on these topics.  And this first one is a doozy.

Starting in 2012, Uncle Sam is putting a choke hold on US Small Businesses.  Remember when Obamacare was going through, how no member of congress actually admitted to having read the entire legislation?  At 2,409 pages, of course they’re not going to read it!  It’s only going to become LAW and have an effect on the lives of every American.  Why the bleep should they READ it?

Well as the legislation is being combed through for the purposes of implementation, some nasty secrets are coming out.  And this is just one of them.

Let me quote CNN on the details:

Section 9006 of the health care bill — just a few lines buried in the 2,409-page document — mandates that beginning in 2012 all companies will have to issue 1099 tax forms not just to contract workers but to any individual or corporation from which they buy more than $600 in goods or services in a tax year.

The stealth change radically alters the nature of 1099s and means businesses will have to issue millions of new tax documents each year.

(from http://money.cnn.com/2010/05/05/smallbusiness/1099_health_care_tax_change/)

I came across this bit of news from the gold bugs — who have figured out that this means every precious metals transaction over $600 will now be tracked by Uncle Sam.   (Gold, silver, and other precious metals are one of the few private investments left…  For now.)  With tracking, Uncle Sam knows where the gold is.  Which makes confiscation of physical gold much easier.  And for those of you who think, “Not my government,” you only need to look back to 1933 and FDR’s Executive Order 6102 “forbidding the Hoarding of Gold Coin, Gold Bullion, and Gold Certificates” by U.S. citizens.  (http://en.wikipedia.org/wiki/Executive_Order_6102)  It could happen again.  We’re getting off track though…

The implications for sole proprietors, home office workers, freelancers, and other small businesses of these new 1099 rules are tremendous.

While a major corporation can hire a few more accountants to churn out 1099s as fast as they blow cash, small businesses (the heart of the US economy) can’t afford to waste time mired in more government paperwork.  (Just think: your local locksmith will have to file a 1099 for the gas station they buy more than $600 worth of gas from; entrepreneurs attending trade shows will have to file 1099s on the show’s producer plus multiple vendors; direct mailers will even have to file 1099s on USPS on the postage they buy!)

Personally, every minute I spend filling out paperwork for Uncle Sam is a minute I can’t spend earning an income.  And I suppose I could hire out the task, but as a small business this is an undue burden — it stifles productivity and hampers commerce.

The good thing is how quickly politicians on both sides of the aisle are working against this particular item.  Representative Daniel E. Lungren of California has introduced a bill to counter the new 1099 rules, H. R. 5141, “to repeal the expansion of information reporting requirements for payments of $600 or more to corporations, and for other purposes.”  And he’s one of many speaking out against it.

But bullheaded politicians bent on re-election over all else are standing firm against such efforts.

Because the current administration — and by that I mean the executive branch down through the powers that be in congress — have made this health care legislation their “last stand,” they’re not ready to budge on any legislation to modify it.  No matter how counter-productive a line item may be, they see the entire legislation as a house of cards where if just one card is removed, the whole structure will fall.

So how likely is it that Section 9006 — the 1099 debacle — will be repealed?  Well, I don’t know.  We’ll have to wait and see.  Though it’s unlikely we’ll see any real action before the November elections, and if the current administration stays in power it’s unlikely we’ll see it repealed before the 2012 implementation date.  So this may be a new burden your business will have to deal with — Uncle Sam’s strangle hold on your small business.

I’ll wrap this up with an idea an associate of mine had.  Ron Paul’s run for president was great in helping people become aware of Libertarianism.  But what we really need are a large number of Libertarian lawmakers on Capital Hill.  What if instead of supporting a national candidate for president, Libertarians instead made it a point to get representation in Congress, starting with the highest-probability districts?  Increase the voices calling for less government meddling at home and abroad, support of individual freedoms, and support for small business (and cutting loose our government from its indentured servitude to Wall Street and the biggest of big businesses).  It’d take a while, but it may start to change things for the better.  Food for thought.

Until next time,

Roy Furr