Gig workers will see a tax shift due to the Democrats' $ 1.9 trillion COVID-19 aid package. Critics of the postponement describe this as burdensome or as “stealing money”.
The change is that starting next year, gig economy companies will have to send 1099-K forms to workers who have made more than $ 600 in a year, compared to previous thresholds of $ 20,000 per year and 200 transactions.
Proponents of the shift say the point is to help workers document their income so that they can later receive social security and other benefits.
"This makes the rules for these big, big and giant online platforms fair compared to what small businesses have already done at the $ 600 threshold," said Caroline Bruckner, gig economy expert and managing director of Kogod Tax the American University Policy Center. She has testified on the matter at hearings in Congress.
Bruckner criticized those who painted the change as imposing new taxes on gig workers.
"These are existing taxes that people have violated for not receiving these forms," she told MarketWatch. "Tax investigations consistently show that taxpayers who do not receive reporting forms are not reporting their income properly."
Nebraska Republican Adrian Smith was among the opposition to the change, which is expected to gross $ 8.4 billion in 10 years. He blew it up in a keynote address last month as the Democratic-run House and Senate worked to pass America's bailout bill.
"Now we've learned that getting that bill down has actually been delayed because the Democrats added a new robbery – which drastically lowers the threshold at which gig workers get a 1099-K," Smith said.
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The online platform Etsy Inc. ETSY and the US Chamber of Commerce were among the organizations that criticized the development in a letter to leading US lawmakers last month.
"This change would put a strain on small business owners and entrepreneurs," the letter said.
"We believe there is a time and place to have solid political conversation related to 1,099,000 thresholds. However, we encourage Congress to continue to focus on helping small business owners and entrepreneurs recover from the devastating effects of COVID -19 pandemic support. "
The postponement should help the government get a better grip on the size of the gig economy, said Bruckner of American University, who previously worked for Democratic lawmakers.
"There isn't a single, reliable, regular measure of gig work and the gig workforce, and that would help develop that understanding," she said.