Monday, June 7, 2010

After Passage of Healthcare Legislation, White House (Finally) Tries to Sell It

Recognizing that the public remains deeply divided and confused over the healthcare legislation, the White House will finally undertake an extensive marketing campaign to tout the substance of the law. According to the New York Times, allies of President Obama will work on the marketing strategy. They will also form and fund a nonprofit entity to accomplish the task.

Opinion polls continue to show that the public is split on the wisdom of the legislation. Several polls also show that a solid majority of people support that law -- once they learn about its content. These polls indicate that the a significant portion of the public is ill-informed about the substance of the legislation. Furthermore, many commentators have criticized the Obama administration for failing to respond sufficiently to attacks on the healthcare legislation.

The public distortion of the legislation could have negative consequences for Democratic candidates in November. This is undoubtedly a strong catalyst for the marketing campaign.


Josh Dowlut said...

Perhaps the requirement that businesses file 1099 tax forms for all b2b transactions over $600? I wonder how many inbound 1099s places like Office Depot or Home Depot will get when every b2b transaction in the country must be reconciled and filed with a 1099 form? Probably not because just as most Americans don't understand there's an entire 10% of their paycheck that doesn't even show up in their withholdings, most won't understand or appreciate the impact of this either.

Darren Lenard Hutchinson said...

Two reactions:

First, the Cato article comes across as melodramatic. It never mentions the idea of electronic filing software. Not only can accounting programs easily isolate the entities that qualify for a 1099, but companies can file them electronically with the IRS.

Second, I am not sure if "most Americans" will be affected by the 1099 rules. Most Americans do not operate businesses.

Finally, I am for full disclosure. People "want" a lot of things, but they seldom want to pay the cost. This includes health care reform and searching for nonexistent weapons of mass destruction.

Josh Dowlut said...

Never underestimate the cost of one's time, especially a small business owner too small to afford a full time book keeper and is forced to wear all hats.

liberal dissent said...

I also wouldn't take a non-lawyer libertarian policy analyst's interpretation of the law at face value; the Cato guys always approach their analysis with the results they want firmly in their head.

Darren Lenard Hutchinson said...

Josh, I assume that most businesses - especially those with more than just a few corporate contracts, have electronic records. The software already exists that can identify the companies that require a 1099, prepare the form, and send it to the IRS and third-party. It is amazing how technology has simplified accounting and tax filing.

I looked for more independent and nonpartisan analysis of this provision and could not find any. Perhaps tax professionals and businesses are not really concerned about this, Cato's fit notwithstanding.

LD: Great point.

Darren Lenard Hutchinson said...

Josh, here's some commentary from CNN. It cites to Cato, a small business group and a citizens' tax group. But it does have a message from the sponsor of the provision. Perhaps all of the drama results because businesses will have the revenue generated, which would enhance tax collection?

Josh Dowlut said...

I think the CNN article's opening line: " An all-but-overlooked provision of the health reform law is threatening to swamp U.S. businesses with a flood of new tax paperwork."

characterizes it accurately.

Electronic streamlining would need to be done at the point of sale with credit/debit cards in order to alleviate the burden, and even then the business owner is still liable for everything. It took me months of fighting with the IRS to straighten out a $62 error my payroll processing company made. I received letters threatening to freeze my bank accounts.....over $62.

""It's a pretty heavy administrative burden," particularly for small businesses without large in-house accounting staffs, says Bill Rys, tax counsel for the National Federation of Independent Businesses."-every administrative regulation disproportionately burdens small business. What percent of Walmart's labor hours are spent complying with the tax code? What percent of a 6 person company's labor hours are spent complying with the tax code?

Complex, burdensome tax and regulatory policy serve as barriers to entry and barriers to growth and function as protective walls for big business. In doing so they reduce competition, raise prices, and worsen the labor market for everyone, not just small business owners.

Darren Lenard Hutchinson said...

The CNN article basically repeats the Cato article. I have read some commentary by tax professionals who say that the reporting is melodramatic. The main reason they urge calm is because the IRS has not promulgated regulations to implement the provision. The details matter, not the hysterical reporting.

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