[Congressional Record Volume 157, Number 142 (Thursday, September 22, 2011)]
[House]
[Page H6354]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 REPEAL 3 PERCENT WITHHOLDING PROVISION

  The SPEAKER pro tempore. The Chair recognizes the gentleman from 
California (Mr. Herger) for 5 minutes.
  Mr. HERGER. Madam Speaker, the 3 percent withholding provision, which 
will come into effect if Congress does not act, essentially forces 
businesses that have contracts with the government to forgo 3 percent 
of their payments as a downpayment on their tax bill. This represents 
yet another burden on our Nation's small businesses and job creators, 
the lifeblood of our economy.
  As a small businessman, I know firsthand about the negative impact of 
burdensome taxes and cumbersome regulations. Many small businesses that 
contract with the government operate on very slim profit margins, so a 
3 percent tax would create serious cash flow problems for them at a 
time when so many are struggling. Aside from that, this provision will 
actually cost the government money. Federal, State, and local 
governments are already facing unprecedented deficits, and yet agencies 
will have to create new collection systems and may face higher costs 
for goods and services if this is not repealed. The Department of 
Defense has said that for the DOD alone, the provision will cost $17 
billion to implement. Madam Speaker, that is $7 billion more than the 
total revenue the tax is expected to raise. In another example of 
Washington math, the provision will force the government to spend more 
money and end up eliminating jobs and hurting small businesses.
  Congress can certainly do better. We must do better. Twenty million 
Americans are out of work, and our small businesses must have the 
certainty they need to create more jobs. We cannot punish law-abiding 
businesses because a few contractors do not pay their taxes. Instead, 
the government should stop awarding government contracts to businesses 
that do not pay. To that point, the OMB and the Treasury Department 
have announced several initiatives to prevent contracts from going to 
companies that are delinquent on their taxes.
  Madam Speaker, we're looking for something we can do right now to 
help job creation in America. Well, this is it. Repealing the 3 percent 
withholding provision will provide a significant benefit to small 
businesses just by getting Washington out of their way. If we don't 
repeal it, we will put small businesses, jobs across America, and our 
efforts at economic recovery at greater risk. It's time to get this 
harmful job-killing provision off the books forever.

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