ZUBRIN: Tax tyranny is upon us

OPINION:

Dear Republicans, I am writing this to ask to you take up arms on a critical issue, which you seem to be virtually ignoring - to your cost and that of the nation.

This is the matter of 1099 tyranny.

You see, while he was ramming through the health care bill, Harry Reid hid in its 2,500 pages of gibberish a provision requiring all businesses - big, small and even sole proprietorships - to file a 1099 form reporting every purchase of $600 or more from every vendor - including small purchases adding up to $600 or more.

This is complete insanity. I own a small research-and-development business with 15 employees. We make hundreds of purchases in the $600 range each year. We would need to file several hundred of those 1099s. Big corporations would need to file millions of them. Furthermore, vendors such as hardware stores will need to keep track of all their sales to each of their customers - tens of thousands for a typical big store - in order to provide an accurate 1099 totaling the purchases of each and every customer who is, or might be, a small business. These forms would have to be reconciled with the records of each business, or the IRS would have grounds to accuse one or the other of a discrepancy.

This bill will not bring the federal government any tax revenue. Rather, by adding to the overhead of companies big and small, it will take away from their bottom line and reduce the taxes they are able to pay accordingly. In my case, I will have to hire a person for $50,000 per year to do nothing but try to obtain and verify the information of such forms. That will cost the federal government $12,000 in lost taxes. If I were a smaller company, however, say with four employees, I could not afford to do that and so would have to either go out of business (thus costing the feds a great deal of tax revenue) or operate illegally and live in fear of prosecution. As for the hardware store, the owner will have to hire a platoon of clerks, which either will reduce his profits and the taxes he pays or force him to increase his sales prices, which will cut into the taxable income of all of his business customers.

But it gets worse. Because there is no fundamental difference between a sole proprietorship and any private person, there is no reason why this provision, if accepted, should not be applied to every taxpayer. Consider: Do you know how much you spent at your local grocery store last year? Certainly more than $600. But how much exactly? What, you don’t know? You will need to know, or under this law, you would commit tax fraud by failing to report accurately the exact amount you spent at every store, hotel, gas station, airline, etc., at which you spent $600 over the course of the year. You would need to get a 1099 from each of them to include in your tax return. If you failed to do so, you could be subject to prosecution. And if you somehow do get all your forms in correctly, you still will be subject to endless arbitrary audits and harassment because you will never be able to prove the accuracy of your submittal to the Internal Revenue Service. Is this the kind of nation we want to live in?

Nearly every Democrat in the House and Senate voted for this law. You need to crucify them for it. I have shown this law to hard-core Democrats, including Obama district captains, and they all agree it is outrageous. Why are you focusing on side issues, where you have 50 percent support, when you can fight for a vital cause where 99.99 percent of the people will back you? Mr. Reid’s 1099 tyranny law is not a small matter. It is a very big deal. Passed through fraud, it is much worse than the publicly debated provisions in the rest of the health care bill or the repeal of the George W. Bush tax cuts. The nation is being threatened with a totalitarian tax nightmare. It will not only destroy businesses coast to coast, it will endanger the freedom of every citizen.

Take a stand on this issue, and you will have the support of nearly every American, left, right and center.

Robert Zubrin is president of Pioneer Astronautics and the author of “Energy Victory: Winning the War on Terror by Breaking Free of Oil” (Prometheus Books, 2007).