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News & Press: Policy News

House Votes to Repeal 3% Withholding Tax

Wednesday, November 16, 2011  
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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.

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