House Votes to Repeal 3% Withholding Tax
Wednesday, November 16, 2011
The House of Representatives passed H.R. 674
by a vote of 422 yeas to 0 nays. The legislation will now make its way to
the President who is expected to sign it into law. The White House has
previously issued a statement in support of repeal.
The House had previously voted overwhelmingly
to repeal the 3% Withholding Tax in late October. The Senate followed
that up with a vote of 95 yeas to 0 nays in favor of repeal. However, due
to differences attached to the Senate-passed bill, the House was required to
take another vote.
Slated to go into effect in 2013, the 3%
withholding tax requires federal, state, and local governments with revenues
over $100 million to withhold 3% of their contract payments. The 3% is
withheld from the total value of the contract, not the profit, and will create
serious problems for small contractors. Compliance with this law will impose
significant, unnecessary financial burdens on both the public and private
sectors, with a disproportionate impact on small businesses.