Source: PRESS RELEASE, 10/27/11

Editors Note: N.C. congressional members voting in favor of H.R. 674: G.K. Butterfield (D, NC-1), Howard Coble (R, NC-6) , Renee Ellmers (R, NC-2), Virginia Foxx (R, NC -5), Walter B. Jones (R, NC-3), Larry Kissell (D, NC-8),  Patrick McHenry (R, NC-10), Mike McIntyre(D, NC-7), Brad Miller (D, NC-13), Sue Myrick (R, NC-9), David Price (D, NC-4), Heath Shuler (D, NC-11), Mel Watt (D, NC-12)

Voting against: none

Jones votes to repeal job-killing 3% withholding tax
 

Today the House passed H.R. 674, which would repeal the job-killing three percent withholding tax on many American businesses scheduled to go into effect on January 1, 2013.  Congressman Walter B. Jones (NC-3) cosponsored the bill and voted for it.  The bill passed by a vote of 405 to 16, and now goes to the Senate for further consideration.    

“With the unemployment rate over 9%, the federal government should be doing everything it can to help employers expand their businesses and hire more Americans,� said Jones.  Ã¢â‚¬Å“This three percent withholding tax would hamstring job creation and economic growth, and I hope the Senate and the President will quickly follow through on the House’s action to help get this economy moving.�  

Ellmers praises 3% withholding repeal

Congresswoman Renee Ellmers released the following statement from her office in Washington this afternoon:

"This morning, the House successfully passed H.R. 674 which repeals the 3 percent withholding mandate for businesses. This legislation, which I was proud to co-sponsor, gives small businesses the certainty and liquidity to invest in their companies and allow them to create more jobs. It also saves valuable time and money for federal, state, and local governments who would have been forced to comply with the significant, unfunded administrative burdens that the rule would impose. Without this repeal, cash-strapped employers would have been faced with uncertainty and minimal cash on hand, thereby impeding cash flows and further undermining job creation. I urge leaders in the Senate to allow this legislation to come to the floor for a vote so that job creators can start hiring again."

In 2006, Congress enacted a 3% withholding requirement on certain payments made to contractors doing business with federal, state, and local governments.  This provision – which was enacted as part of a larger package featuring numerous other significant tax changes – was purportedly intended to improve tax compliance. The 3% withholding rule was originally scheduled to take effect on January 1, 2011, but because of strong concerns raised by employers and government entities alike about the potentially significant burdens it could create, the rule’s effective date has subsequently been delayed until January 1, 2013. Once the potential burdens of this requirement became evident, House Republicans started working to repeal this rule, including it as part of the GOP alternative to the Democrats’ failed 2009 stimulus bill.

Foxx votes for regulatory and tax relief for businesses

Congresswoman Virginia Foxx (NC-05) voted today for legislation (H.R. 674) to repeal a federal mandate to require state, local and federal governments to withhold three percent of payments made to companies that do business with the government.  President Obama recently said this mandate “keeps capital out of the hands of jobs creators� and has endorsed the House bill.

“This federal mandate would have fallen particularly hard on small and family-owned businesses that don’t have massive cash holdings,� Foxx said.  Ã¢â‚¬Å“Repealing this job-killing regulation will help free up cash for small businesses that they can use to invest in their operations and in hiring new employees.�   

The three percent withholding rule was originally intended to increase compliance with federal taxation.  However, most companies that do business with local, state or federal governments would be unfairly harmed by the new requirement that aimed to curtail tax delinquency.  

Additionally, government agencies have questioned whether the additional tax revenue collected would be greater than the cost of complying with the new rule.  For instance, the Department of Defense estimated that it would spend $17 billion over 5 years to comply with the rule, while the withholding provision is only expected to bring in $11 billion over the next ten years.  

The three percent withholding repeal bill, H.R. 674, passed the House 405-16.

“There are better ways to go after tax scofflaws than punishing all job-creators with a harmful government mandate,� Foxx said.  Ã¢â‚¬Å“I’m pleased that the House passed this bipartisan bill and urge the Senate to give it an up or down vote as soon as possible.  More than 15 bipartisan bills focused on job-creation have passed the House and are awaiting a vote in the in theSenate.  It’s past time they got to work.�