Health Care Reform Bill Buries Small Businesses in a Deluge of Paperwork

Tue, Jun 1, 2010

Health Care, Waste

Human beings can have a high standard of living when their needs get met.  In a marketplace, needs get met best when a few conditions occur.

1) the person who has the need is able to communicate that need to someone who can provide for that need.
2) the person who has the means to meet the need is able to communicate that fact to those who have the need.
3) the need provider and receiver have the freedom to agree to the terms under which that need will be met.
4) the absence of interference in the above process
5) the absence of interference in the subsequent delivery of all provisions necessary to meet the need

A very good reason to be pro-small-government and anti-bureaucracy is because of the destruction wrought by bureaucrats that so gum up the works in the above process that even though there are needs in the world that could be met, the cost of meeting those needs is so high that need providers don’t get into business.

Nowhere is the risk of bureaucracy so great than is small markets, which are most often filled by small businesses.

Why?  Because the cost of complying with regulation is the same whether an enterprise is large or small.  The regulatory cost of setting up a business (licensing, permits, etc) is the same for a large or small business.

The greater the burden to set up a business, relative to the opportunity of setting up such, the less likely the business will be set up.  Because targeted problems usually have small markets, and because small markets are often best served by small businesses, when regulatory costs are high these businesses don’t get started and these markets don’t get served.

Well, what happens when regulatory and compliance costs massively rise across the board for ALL small businesses?  We’re about to find out.  From Cato:

The health care bill that the Democrats rammed through Congress at the end of March seems to be the gift that keeps on giving.

The latest surprise is Section 9006(b)(1) — come on, I know you’ve read it — which requires that businesses provide a 1099 form to every vendor with whom they do more than $600 worth of business over the course of a year. A 1099 is similar to a W-2 form, but for income other than wages. Businesses will also have to file a copy of the form with the IRS.

Of course businesses already have to file 1099s for outlays on items like consultants.

But the new rule will mean that even the smallest of businesses will have to issue a form — and file with the IRS — for virtually every purchase or payment.

This is a very, very big regulatory expense.  What will happen is that many people who could start small businesses won’t start small businesses.  Other small businesses who are in operation today will add this to the number of burdens laid on them by government, and they’ll shutter.


Big Government, the Grinch that keeps on Giving.

So, what to do?

Lobby your congressional representatives like mad.  Call and let them know that if they do not repeal this portion of the health bill, the regulatory requirement could put your small business out of business.

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2 Responses to “Health Care Reform Bill Buries Small Businesses in a Deluge of Paperwork”

  1. Robert Says:

    Internal Revenue Code, Section 7701(a)(14): “Taxpayer: The term ‘taxpayer’ means any person subject to any internal revenue tax.”

    “The revenue laws are a code or system in regulation of tax assessment and collection. They relate to taxpayers, and not to nontaxpayers. The latter are without their scope. No procedure is prescribed for nontaxpayers, and no attempt is made to annul any of their rights and remedies in due course of law. With them Congress does not assume to deal, and they are neither of the subject nor of the object of the revenue laws.” United States Court of Claims, Economy Plumbing and Heating v. United States, 470 F.2d 585, at 589 (1972)


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