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Republicans Take First Step In Their Battle to Repeal Health Reform

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This post originally appeared on Daily Kos.

In their zeal to repeal health reform, Republicans are taking aim at one provision of the Affordable Care Act--intended to strengthen already existing tax law--with potentially devastating results. They are doing by means of an amendment, to be voted on tomorrow from Sen. Johanns (R-NE) to the small business bill, that would repeal that provision.

Here's the basic rundown from Center for Budget and Policy Priorities:

Prior to enactment of the health reform law, businesses generally had to report to the Internal Revenue Service any payments of more than $600 they made to vendors for services they received; this reporting requirement was designed to help the IRS determine whether vendors were accurately reporting their income on their tax returns. Both the Government Accountability Office (GAO) and the IRS found, however, that the requirement was not sufficient to prevent a substantial number of vendors from significantly under-reporting their income in order to reduce their tax bills. A key problem was that the requirement exempted all payments to corporations, as well as all payments to vendors for goods and property rather than services.

The GAO, the IRS, and the Treasury Departments of both President Bush and President Obama all recommended strengthening the reporting requirement to remedy this problem. Accordingly, the health reform law (known as the Affordable Care Act) eliminated the current exemptions, requiring businesses to report payments of more than $600 to corporations and payments for goods and property (as well as for services). This new requirement is scheduled to take effect in 2012.

Some small businesses have expressed concerns that this change will impose a large paperwork burden and force them to track many additional expenditures, such as meals, gasoline, shipping, and store purchases. But repealing the provision entirely, as the Johanns amendment would do, would leave in place a clearly inadequate reporting regime that has failed to prevent widespread tax avoidance.

Repeal would also cause the loss of $17.1 billion in revenue over ten years (the amount of revenue that otherwise would be collected, due to the improved tax compliance that would result from the provision of the Affordable Care Act). To make up for this loss, the Johanns amendment would strip $11 billion in Affordable Care Act funding for critical investments in health prevention and related activities and would seriously weaken other aspects of the health reform law.

And what's on the chopping block is serious, namely the Prevention and Public Health Fund, "10-year $15 billion commitment to wellness." This is the smart investment on the smart side of health care--creating and strengthening programs to keep people from getting sick and having to have much more expensive treatment. The prevention measures in this fund include expanding screenings for breast and colon cancer, smoking cessation and prevention programs, adult vaccine programs, and programs to reduce heart disease and diabetes. In other words, the smart, basic stuff that even Republicans saw as a necessity in the larger debate.

You'll never guess which Democrats supports the Johanns amendment. Yeah, you got it, Blanche Lincoln (sound of DSCC/DNC money being flushed down the toilet), though Evan Bayh, Mark Begich, Ben Nelson, and Jeanne Shaheen have all signed onto a letter to the IRS expressing their concern over enforcement of the reporting requirements. Bill Nelson has an alternative amendment which would raise various thresholds in the provision--it would only apply to businesses with more than 25 employees and set the reporting threshold at $5,000 instead of $600.

The Johann amendment is the first serious salvo in the Republican battle to repeal the Affordable Care Act. Luckily, it requires 60 votes to pass, and it's unlikely to get them, but it shouldn't get a single Dem vote. This isn't going to be the silver bullet for Lincoln back home in Arkansas. She's been toast since the race began, so she should just do the right thing for the party that has done far more for her than she's deserved. Defeating this amendment with a unified Dem majority is critical for fending off the repeal battles that are coming.