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Thursday, July 29, 2010

1099 Reporting and Healthcare Reform

There was a particularly evil clause buried in the healthcare "reform" law. All businesses are required to issue a 1099 form for *EVERY* transaction of $600 or more. It's $600 aggregate per year, so two $301 transactions are still reportable.

I didn't see anyone publicly mention the new 1099 requirement, until after the law was passed. That's the "benefit" of 2000+ page laws written in incomprehensible legal jargon.

You might wonder "WTF? What does 1099 reporting have to do with healthcare reform?" Politicians say "This law won't cost the government/taxpayers money! We aren't raising taxes!" The 1099 requirement isn't a tax hike. It's stricter enforcement of a law that already exists.

(There was a tax hike in the healthcare "reform" law, the "tanning salon tax".)

The President said "The individual mandate to buy health insurance is not a tax hike." Actually, the "individual mandate" was implemented via an income tax hike. If you own health insurance, then you get a tax credit equal to the tax hike.

Previously, you got an income tax credit for mortgages and other things. Now, you get an income tax credit for owning health insurance. The "penalty for being uninsured" is low, but that will probably be increased later. If you're an agorist and have an agorist doctor, paying the penalty is probably cheaper than enrolling in a State-licensed plan.

Politicians claim "This law won't increase the deficit!" They count $20B+ of new taxes collected, due to stricter 1099 reporting.

Politicians like to bundle bad laws with otherwise popular laws. Every Democratic politician is "for healthcare reform", so he won't object to the 1099 reporting requirement. Who would vote against "healthcare reform" just to object to the 1099 reporting requirement. Besides, most Congressmen don't even bother reading the law before voting.

Congress and the IRS have a bunch of "revenue enhancers" they want to pass. They stick these tax hikes in unrelated laws. This allows politicians to claim "This law won't cost money!" By adding "revenue enhancers" to a law, politicians can claim no net deficit increase. State parasites always favor tax hikes.

The 1099 reporting requirement is a huge tax hike for small businesses. Some claim they will need 1-2 more accountants, just to comply with the law. The tax doesn't hurt large corporations, who usually deal in large amounts anyway. For example, my headhunter/pimp is on my employer's "preferred vendor list" and already gets a large quarterly check and 1099.

There's an interesting corollary to this law. Now, gold/silver dealers are required to report almost all transactions. Previously, only transactions over $10k/year were reportable. This law enables State thugs to track everyone who buys/sells gold/silver.

This law particularly hurts dealers who buy gold/silver. If the transaction is more than $600, they're required to get your SSN and issue a 1099 form. If you try to sell gold to a State licensed dealer, you'll get a 1099 form and have to pay income tax on the gain.

Some people say that the 1099 requirement will drive more businesses off-the-books. For this reason, "agoristbay" and a gold/silver barter network seems like a good idea. (The point of agoristbay is not "Lolz! Let's do something illegal!" The point is to set up a useful business. I would buy gold/silver, if only there were a liquid cash market. I would work as an agorist, if only there were a place to buy/sell things. I'm trying to create a business that I would use as a customer.)

There's another subtle evil of the law. The "$600" amount is not indexed for inflation. After inflation, $600 will be worth $300 or less in a few years.

I'm somewhat confused about the 1099 requirement. Does it apply to literally *EVERYTHING*. If I pay my dentist $700, does that mean we are required to exchange 1099 forms? If I pay a car mechanic $700, does that require a 1099 form? It seems that the law applies to every transaction.

All taxation is theft. The income tax means that State thugs are a party to every economic transaction. People have to get permission from State bureaucrats whenever they work.

The 1099 requirement is a huge tax hike. It hurts small businesses more than large corporations, due to a regressive compliance cost tax. It's a huge restriction of freedom. Everyone is required to work for the State as an unpaid tax collector. Government is one huge extortion racket.

The abusive 1099 requirement might be a good thing. A lot of people will just ignore it. Some businesses may be forced off the books, just to survive. I'm interested in experimenting with "agoristbay" and a gold/silver barter network. This law makes "agoristbay" more valuable (and more risky).

Working as an agorist is risky. Being a complacent slave as the system collapses is also risky. There's no 100% safe survival strategy. I'm noticing a lot more awareness for "Taxation is theft! Who needs a government?" On many forums, "Taxation is theft!" is now the majority opinion. That's a huge improvement, compared to just a few years ago.

The 1099 reporting requirement is an evil clause buried in the fine print of an evil law. State thugs say "We support small businesses!", while enacting as many laws and regulations as possible to cripple them. Operating a small business isn't explicitly legal. There's a huge State regulatory compliance cost. As a small business owner, the taxes you pay subsidize your larger corporate competitors.

1 comment:

Scott said...

The aggregate part has insidious implications.

I spend more than $600 at the grocery store each year, don't you? I think everyone does.

Therefore the grocery store, a business, is required by law to track and report my purchases to the IRS.

Let me ask you this. How are they not going to know who has passed the $600 aggregate limit unless every single customer is required to present a SSN and state ID for every single purchase, no matter how small?

The answer is there is no way really. You will be required to present a SSN for every purchase at every store, even a bottle of soda might push you over the $600 limit, so you will have to be tracked for every purchase.

For those who are Christians, this has religious implications. No one may buy or sell unless he has received a mark or the number of his name. Of course no churches will say anything about this unless it is to tell their congregants that everything is fine and it is OK to go along with this.

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