[Congressional Record Volume 157, Number 163 (Thursday, October 27, 2011)]
[House]
[Pages H7139-H7143]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
3 PERCENT WITHHOLDING REPEAL AND JOB CREATION ACT
Mr. CAMP. Mr. Speaker, pursuant to House Resolution 448, I call up
the bill (H.R. 674) to amend the Internal Revenue Code of 1986 to
repeal the imposition of 3 percent withholding on certain payments made
to vendors by government entities, and ask for its immediate
consideration.
The Clerk read the title of the bill.
The SPEAKER pro tempore (Mr. Womack). Pursuant to House Resolution
448, the amendment printed in House Report 112-261 is adopted and the
bill, as amended, is considered read.
The text of the bill, as amended, is as follows:
H.R. 674
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``3% Withholding Repeal and
Job Creation Act''.
SEC. 2. REPEAL OF IMPOSITION OF 3 PERCENT WITHHOLDING ON
CERTAIN PAYMENTS MADE TO VENDORS BY GOVERNMENT
ENTITIES.
(a) In General.--Section 3402 of the Internal Revenue Code
of 1986 is amended by striking subsection (t).
(b) Effective Date.--The amendment made by this section
shall apply to payments made after December 31, 2011.
The SPEAKER pro tempore. The gentleman from Michigan (Mr. Camp) and
the gentleman from Michigan (Mr. Levin) each will control 30 minutes.
The Chair recognizes the gentleman from Michigan (Mr. Camp).
General Leave
Mr. CAMP. Mr. Speaker, I ask unanimous consent that all Members have
5 legislative days in which to revise and extend their remarks and to
include extraneous material on H.R. 674.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Michigan?
There was no objection.
Mr. CAMP. Mr. Speaker, I yield myself such time as I may consume.
I come to the floor today in strong support of H.R. 674 to repeal the
onerous, job-killing 3 percent withholding law. While this legislation
has 269 cosponsors, I'd like to acknowledge the leaders on the bill,
Ways and Means Health Committee Chairman Wally Herger and our Democrat
Ways and Means colleague Congressman Earl Blumenauer. In addition to
these advocates, we also have 25 other members of the Ways and Means
Committee supporting this legislation--a clear signal of the strong
bipartisan support for repeal of this 3 percent withholding rule.
Job creators know all too well that this provision, like many efforts
to increase Federal revenue and tax compliance, is lined with
paperwork, complexity and costs--all of the things that hinder, rather
than help, promote a climate for job creation.
By considering and passing this bipartisan bill, we will unlock new
opportunities for hiring. Job creators have told us just that, and it's
why this legislation has the support of a diverse coalition of more
than 170 groups, including the Government Withholding Relief Coalition.
Like those job creators, others recognize the need for repeal,
including President Obama. In the statement of administration policy in
support of H.R. 674, the administration noted that ``the effect of the
repeal of the withholding requirement would be to avoid a decrease in
cash flow to these contractors which would allow them to retain these
funds and use them to create jobs and pay suppliers.'' Mr. Speaker, I
couldn't agree more.
Supporting the repeal of the 3 percent withholding law is a
demonstration that Washington can work together. With a strong
bipartisan vote, we can reduce the uncertainty facing America's job
creators, and we can free up valuable resources businesses can use for
hiring.
I ask my colleagues to vote ``yes'' on H.R. 674 and urge the Senate
to swiftly take up and pass this legislation.
I ask unanimous consent that the gentleman from California (Mr.
Herger) be designated to control the balance of my time.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Michigan?
There was no objection.
The SPEAKER pro tempore. The Chair recognizes the gentleman from
Michigan (Mr. Levin).
Mr. LEVIN. Mr. Speaker, I yield myself such time as I may consume.
I rise in support of this bill. It should have happened earlier. I
think most of us, if not all of us, agree that this provision should be
repealed. It is not narrowly targeted, and it would indeed impose
significant and costly burdens on Federal, State, and local
governments. I think we should all remind ourselves it was passed some
years ago; and it was, I think, misguided when it was enacted in 2006
when we in the minority here did not control the Congress. Indeed, the
Ways and Means Committee when we were in the majority approved a repeal
of the provision in 2009, and the Congress ultimately delayed its
effective date.
I do want to comment on the title of this bill that refers to job
creation, and it should be noted that this is really not going to
address the need for creation of jobs in our country. We have been here
now 10 months. There is still no effort by the majority here in the
House to bring up any meaningful jobs legislation; and when the
President brings up proposals to create jobs, they are thwarted by the
majority here and by the Republicans in the Senate.
So let's support this bill but not pretend that it will create jobs;
and in this respect I refer to a recent statement by Mark Zandi, the
chief economist for Moody's Analytics who said this about this bill:
``I don't think it's meaningful in terms of jobs. It's more trying to
clean up something that needs cleaning up.'' Indeed, this needs to be
cleaned up. Therefore, we need to pass it.
{time} 0920
Let me also comment on--and we'll talk about this later on the second
bill--the pay-for. I went before the Rules Committee to ask that there
be consideration of a different pay-for, what we'll be considering
later. I just want everybody to understand the facts, and each can
judge on his or her own how they'll vote. The impact of the pay-for
that came through the Ways and Means Committee could cause up to
500,000 individuals to lose health care coverage.
I offered an amendment in the Rules Committee that would have offset
the cost of a business tax provision by closing a loophole on the
business side that's improperly enjoyed by oil and gas industry giants.
Unfortunately, my amendment was ruled out of order. We'll talk about
that later.
We're now on this bill. I urge its support. Let's not pretend it's a
job creation bill. Let's get busy here on bills that will indeed help
to promote jobs in the private sector of the United States of America,
as our President has proposed and he has pleaded that there be
consideration by the House and the Senate, only to be responded to with
deaf ears.
I reserve the balance of my time.
Mr. HERGER. Mr. Speaker, I yield myself such time as I may consume.
I rise in strong support of H.R. 674, the 3% Withholding Repeal and
Job Creation Act. The American people have repeatedly called on
Congress to work together in a bipartisan way to encourage job
creation. That's exactly what we're doing here today.
H.R. 674 repeals a tax that requires government agencies at all
levels--Federal, State, and local--to withhold 3 percent of all
payments for goods and services beginning at the end of next year. This
tax will affect everyone, from manufacturers to road builders to
physicians who treat seniors on Medicare. Many of these businesses
operate on margins of less than 3 percent, meaning that this provision
will harm their cash flow and effectively force them to give the
Federal Government a no-interest loan.
Even though it doesn't go into effect for another year, the 3 percent
withholding tax is holding back job creation right now. Coming from a
small business background, I can attest that businesses look several
years ahead when they're deciding how to invest.
This week the Associated General Contractors of America released a
survey finding that nearly half of all construction firms will be
forced to hire
[[Page H7140]]
fewer workers if the 3 percent withholding tax takes effect. As one AGC
member put it, ``The way the economy is now, we are very lucky to make
3 percent profit. This could put us out of business, along with our
300-plus employees.''
Now is the time to eliminate the barriers that are standing in the
way of jobs for American workers. H.R. 674 has the support of
businesses, State and local governments, and 269 bipartisan cosponsors
in the House of Representatives, as well as the Obama administration.
Mr. Speaker, I would like to enter into the Record a letter from the
Government Holding Relief Coalition, signed by more than 150
businesses, health care, education, and local government groups
supporting passage of this legislation.
With that, I reserve the balance of my time.
Government Withholding
Relief Coalition,
October 26, 2011.
To the Members of the U.S. House of Representatives: The
Government Withholding Relief Coalition and its member
organizations strongly urge you to vote for H.R. 674, a
bipartisan bill to repeal the burdensome 3% Withholding Tax
mandate enacted in Section 511 of the Tax Increase Prevention
and Reconciliation Act of 2005 (P.L. 109-222), when it is
considered on the House floor later this week.
Unless repealed before it takes effect on January 1, 2013,
the 3% Withholding Tax will have a dramatic, negative impact
on millions of honest taxpaying businesses as well as state
and local governments, health care providers, farmers and
colleges and universities.
For many businesses the profit margin for projects they
complete is often less than 3% meaning that the withholding
tax will create significant cash flow problems for day-to-day
operations as well as draining capital that could be used for
job creation and business expansion. This mandate is also
anti-stimulus in the sense that it removes money from local
economies and sends it to the IRS.
The mandate is already proving costly and will increase
exponentially as the implementation deadline moves closer. If
this mandate is not repealed, it will cost companies and
governments at all levels substantial amounts of money just
to prepare to comply with this unnecessary and unfortunate
tax provision. These exorbitant expenditures will be at the
expense of hiring new employees, expanding businesses, and
providing government services at a time that neither the
public nor private sector can handle such unnecessary costs.
In addition, we strongly support the view that those
receiving payments from the government should meet their
federal, state and local tax obligations. However, imposing
an onerous 3% Withholding Tax on transactions between
government and honest taxpaying businesses is not the answer.
The Government Withholding Relief Coalition, which
represents all sectors of the economy, believes it is
imperative that the 3% Withholding Tax be repealed as soon as
possible to limit the damaging impacts to our economy. We
appreciate the bicameral, bipartisan support of efforts to
repeal it and strongly encourage you to vote for H.R. 674.
Sincerely,
Government Withholding Relief Coalition:
Aeronautical Repair Station Association; Aerospace
Industries Association; Air Conditioning Contractors of
America; Air Transport Association; Airports Council
International-North America; America's Health Insurance
Plans; American Ambulance Association; American Bankers
Association; American Bus Association; American Clinical
Laboratory Association; American Concrete Pressure Pipe
Association; American Congress on Surveying and Mapping;
American Council of Engineering Companies; American Dental
Association; American Farm Bureau Federation; American Gas
Association; American Heath Care Association; American
Institute of Architects; American Institute of Certified
Public Accountants; American Logistics Association.
American Medical Association; American Moving and Storage
Association; American Nursery and Landscape Association;
American Road & Transportation Builders Association; American
Society of Civil Engineers; American Society of Landscape
Architects; American Subcontractors Association; American
Supply Association; American Traffic Safety Services
Association; American Trucking Associations; Armed Forces
Marketing Council; Associated Builders and Contractors;
Associated Equipment Distributors; Associated General
Contractors of America; Association of Management Consulting
Firms; Association of National Account Executives;
Association of School Business Officials International;
Baltimore Washington Corridor Chamber; Biotechnology Industry
Association; Business and Institutional Furniture
Manufacturers Association.
CTIA-The Wireless AssociationTM; California
Association of Public Purchasing Officers; Coalition for
Government Procurement; Colorado Motor Carriers Association;
Computing Technology Industry Association; Construction CPAs/
Consultants Association (CICPAC); Construction Contractors
Association; Construction Employers' Association of
California; Construction Financial Management Association;
Construction Industry Round Table; Construction Management
Association of America; Design Professionals Coalition;
Edison Electric Institute; Electronic Security Association;
Engineering & Utility Contractors Association; Federation of
American Hospitals; Financial Executives International;
Financial Services Institute; Finishing Contractors
Association; Gold Coast Hispanic Chamber of Commerce.
Government Finance Officers Association; Hawaii
Transportation Association; Heating, Airconditioning &
Refrigeration Distributors International; IPC--Association
Connecting Electronics Industries; Independent Electrical
Contractors, Inc; International City/County Management
Association; International Council of Employers of
Bricklayers and Allied Craftworkers; International
Foodservice Distributors Association; International
Municipal Lawyers Association; Large Public Power Council;
Management Association for Private Photogrammetric
Surveyors; Mason Contractors Association of America;
Mechanical Contractors Association of America; Medical
Group Management Association; Messenger Courier
Association of the Americas; Miami Dade County;
Mississippi Trucking Association; Modular Building
Institute; Motor Transport Association of Connecticut;
Munitions Industrial Base Task Force.
National Asphalt Pavement Association; National Association
for Self-Employed; National Association of College &
University Business Officers; National Association of
Counties; National Association of Credit Management; National
Association of Educational Procurement; National Association
of Energy Services Companies; National Association of
Government Contractors; National Association of
Manufacturers; National Association of Minority Contractors;
National Association of State Auditors, Comptrollers and
Treasurers; National Association of State Chief Information
Officers; National Association of State Procurement
Officials; National Association of Surety Bond Producers;
National Association of Water Companies; National Association
of Wholesaler-Distributors; National Beer Wholesalers
Association; National Corn Growers Association; National
Council for Public Procurement and Contracting; National
Defense Industrial Association.
National Electrical Contractors Association; National
Electrical Manufacturers Association; National Emergency
Equipment Dealers Association; National Federation of
Independent Business; National Institute of Governmental
Purchasing; National Italian-American Business Association;
National League of Cities; National Mining Association;
National Office Products Alliance; National Precast Concrete
Association; National Propane Gas Association; National
Office Products Alliance; National Railroad Construction &
Maintenance Association; National Ready Mixed Concrete
Association; National Roofing Contractors Association;
National School Transportation Association; National Small
Business Association; National Society of Professional
Engineers; National Society of Professional Surveyors;
National Utility Contractors Association.
National Wooden Pallet and Container Association; New
Jersey Chamber of Commerce; North-American Association of
Uniform Manufacturers & Distributors; North Coast Builders
Exchange; Office Furniture Dealers Alliance; Oregon Trucking
Association; Owner Operator Independent Drivers Association;
Petroleum Marketers Association of America; Plumbing-Heating-
Cooling Contractors--National Association; Printing
Industries of America; Professional Services Council;
Regional Legislative Alliance of Ventura and Santa Barbara
Counties; Retail Energy Supply Association; Santa Rosa
Chamber of Commerce; Security Industry Association; Service
Disabled Veteran Owned Small Business Council; Sheet Metal
and Air Conditioning Contractors National Association, Inc.;
Shipbuilders Council of America; Small Business &
Entrepreneurship Council.
Small Business Legislative Council; South Carolina Trucking
Association TechAmerica; Textile Rental Services Association
of America; The Association of Union Constructors; The
Distilled Spirits Council of the U.S.; The Financial Services
Roundtable; U.S. Chamber of Commerce; U.S. Conference of
Mayors; United States Telecom Association; Veterans Business
Institute; Veterans Entrepreneurship Task Force; Water and
Wastewater Equipment Manufacturers Association; Women
Construction Owners & Executives; Women Impacting Public
Policy.
Mr. LEVIN. Mr. Speaker, I yield such time as he may consume to the
gentleman from Oregon (Mr. Blumenauer), who is a lead sponsor of this
bill.
Mr. BLUMENAUER. I appreciate your courtesy, Mr. Levin, as I
appreciate the opportunity to work with my friend, Mr. Herger, on
moving this bill forward.
It was only a couple of months ago that we were having a press
conference in the Triangle with a bipartisan group
[[Page H7141]]
of Members of Congress, representatives from some of the coalition
members that my friend Mr. Herger referenced, to be able to focus on
the need to repeal this provision.
Mr. Speaker, I think it is important to mark this critical step
today. It will pass on the floor of the House in a strong bipartisan
vote, reaffirming the bipartisan cooperation that got us to this point.
I think that this is an example of what potentially we could do because
a number of the members of the coalition that Mr. Herger referenced and
that he is entering into the Record are likewise people that have a
vision about how Congress and the Federal Government could help rebuild
and renew America.
The contractors, the engineers, and the architects that we have heard
from would also like us to step up in a bipartisan manner to deal with
that. There were references to people who are dealing with health care.
We still face sort of a health care crisis in this country. We may be
able to deal with much of it with the health care reform bill. But many
of the provisions that are embedded in law now have their core as
bipartisan ideas. And I hope the same bipartisan spirit could help us
accelerate bipartisan reforms so that the American public benefits in
the health arena as well.
You're going to hear a little spirited exchange on the floor of the
House about how we pay for this legislation because it has a CBO score
that's attached to it that suggests that this will raise revenue. Well,
I have two observations that I think are important to note dealing with
the pay-for. First and foremost, the sad fact is that this bill
actually would cost more to implement than it would ever raise for the
Federal Government. But we have a quirk in our scoring rules where they
credit revenue. They don't deal with the cost of compliance. And this
complicated piece of legislation, were it ever enacted, would require
the Department of Defense, the General Services Administration, and up
and down the Federal Government to develop mechanisms to try to
implement it. It wouldn't just cost contractors, hospitals, State, and
local government. It would actually cost the Federal Government far
more than we would collect. I think one estimate was for the Department
of Defense it would be $17 billion, which would dwarf what would be
collected.
We need, Mr. Speaker, as we move forward, to do a better job of
thinking about the scoring rules. It's not CBO's fault, but that's how
we play the game. And I find it troubling.
It also, I think, speaks volumes about how we operate in the
legislative process. This was passed in 2005. It was kind of dropped in
in sort of backroom negotiations. It was never part of regular order.
There was no hearing before our Ways and Means Committee to talk about
this because the elements that have been documented in our committee
and on the floor about the unworkability of this would never have
survived a regular legislative process.
Well, I'm pleased that the Democratic side has at least tried first
to delay and then to fix this. I'm pleased we have worked with Mr.
Herger in a bipartisan fashion to bring this legislation forward. I
think Mr. Camp and Mr. Levin are committed to regular order. We've been
having, I think, some very productive discussions on major issues. I
hope we can keep this commitment to regular order to be able to make
sure we don't have something like this in the future that has massive
unintended consequences.
Mr. Speaker, this is an idea that never should have been advanced in
this form. It's been a long road to try and correct it. Today, we're
making an important step towards that correction, but I would add a
note of caution. The same spirit of cooperation and focus that has
gotten us to this point with what will be an overwhelming vote--I hope
it's unanimous--we need to keep going so this isn't a casualty of the
back-and-forth process between the House and the Senate. The Senate
played a large role in giving us this in the first place. We need to
make sure that it is not caught up in the larger dramas that occur
around here, that we can keep our eye on the ball, and that we can fix
it.
{time} 0930
I do want to say just one brief word about the pay-for. As I say,
it's illusory, because it would cost far more than we would ever
collect, but we have to deal with the scoring rules as they are.
There are two proposals: One would tighten some eligibility for the
health care reform; the other would take away some unnecessary tax
benefits to large oil companies that long ago ceased to have any impact
on oil exploration or reducing price. But while I actually think that
the pay-for from our side of the aisle dealing with the oil tax
adjustment is superior, I think as a practical matter we are going to
have to do both of these in the months ahead if we're going to deal
with our budget problems, reducing expenditures.
I am hopeful that we don't allow the debate over the pay-for to
obscure the need to move forward. And as a practical matter, we have
big challenges ahead to get our deficit under control. I think,
frankly, that both of these are items that should be enacted into law,
I think will be enacted into law. And while there will be a spirited
discussion--and I respect the people on both sides, and I think that
they will be making good points--I hope it doesn't get in the way of
the big picture.
In closing, I appreciate the gentleman from Michigan permitting me to
speak on this, his leadership on this. I salute my friend, Mr. Herger.
I hope we can mark this step today for what it is but keep our eye
focused on how we deal with these larger issues going forward so we're
not back in this situation in the future.
Mr. HERGER. Mr. Speaker, I yield myself such time as I may consume.
I want to thank my good friend from Oregon (Mr. Blumenauer) for his
support as the lead cosponsor on the other side of the aisle.
I would like to take a moment to read a few of the comments that the
Ways and Means Committee received from businesses and organizations
across the country demonstrating why repealing the 3 percent
withholding tax is critical to laying a stable foundation for job
creation.
Buffalo Supply, Incorporated, in Boulder, Colorado, writes, ``We are
a 28-year-old small business that sells high-value medical equipment at
a low margin, with a very significant part of our sales going to the
Federal, State, and local governments. The 3 percent withholding tax
will exceed our company's tax liability, which will destroy cash flow
and ultimately hinder our ability to grow the business and add new
employees.''
Ian Frost, principal and founder of EEE Consulting in Virginia, says,
``If enacted, the rule would mean the withholding of approximately
$130,000 of revenue, using our projected 2011 revenue. This 3 percent
withholding would essentially be a loan to the government for the year
until our taxes are filed. Worse still, it might require our company to
secure a loan to help us cover operating expenses at a time when cash
in the bank is limited. The withholding could limit our ability to make
payroll each month and limit our use of profits to give bonuses to our
employees, expand our business, and hire new employees. A $130,000
withholding each year would deplete our cash reserves by about 30
percent.''
The University of Illinois notes, ``This will add expenses at a time
when our university, like many others around the country, is facing
reduced State support. We would have no choice but to pass these
expenses on to our students, many of whom are also struggling to make
ends meet.''
The American Medical Association states, ``In repealing the 3 percent
withholding provision altogether, H.R. 674 will help Medicare
beneficiaries maintain access to care, while assisting government
agencies, physicians, and other health care providers avoid substantial
implementation costs that will outweigh the benefits.''
And I'd like to add that, at a time when many of us are concerned
about fixing the SGR that threatens massive cuts to physicians
participating in Medicare and a loss of access to physician services
for many seniors, the last thing we want to do is add yet another
potential cut to physicians' payments.
Again, these are just a few of the dozens--or hundreds--of letters
and testimonials the committee received from businesses across the
country. We need to pass H.R. 674 and repeal this harmful tax today.
[[Page H7142]]
I reserve the balance of my time.
Mr. LEVIN. Mr. Speaker, I yield such time as he may consume to a most
active member of our committee, the gentleman from New Jersey (Mr.
Pascrell).
Mr. PASCRELL. Good morning.
I come to the floor today in support of H.R. 674, which will repeal a
burden on government contractors, particularly small businesses.
I opposed the enactment of the 3 percent withholding when a
Republican Congress and a Republican administration enacted it because
I knew that it would hurt the economic engines of our economy.
The repeal of this requirement will free up small businesses' cash
flow, increasing their ability to add jobs and bid on new projects.
This is only a very small part of a jobs plan that could help to reduce
unemployment and wage stagnation.
The majority has not allowed a vote on known job-creating measures
such as the infrastructure bank or funding for our first responders and
teachers, so I would imagine that that's not very important, those
items. Rather, the majority has decided to promote their ``False
Fifteen'' bills that attack clean air, safe water, and consumer safety.
Be prepared, America, to eat poison.
Not only do independent economists state that these bills do not
create jobs, a recent report found that the so-called ``economically
stifling'' regulatory atmosphere is not as bad as they say. The report
says this: ``Obama's White House has approved fewer regulations than
George W. Bush at this same point in their tenures, and the costs of
those rules haven't reached the annual peak set in fiscal 1992 under
President Bush's father,'' President Bush I. You would never think that
by listening to the propaganda on the other side of the aisle. We've
overregulated--supposedly--and we've caused businesses to spend so much
money on these regulations. But again, when we look at the facts, this
is not true.
Eat your words. Even former Reagan Treasury official Bruce Bartlett
quoted the Wall Street Journal saying, ``The main reason U.S. companies
are reluctant to step up hiring is scant demand, rather than
uncertainty over government policies.'' So you can grow as many horns
as you want onto the President. Once again, look at the facts and the
statistics: more regulations at this point when former President Bush
was the President, Bush II.
It is ironic that the majority is adjusting health reform to pay for
this legislation. You condemn the health act, and then you take the
money from the health act to pay for this legislation. That is a Ponzi
scheme if I've ever heard one. The majority already voted to repeal
health reform, yet to pay for this legislation--which is a separate
piece of legislation--health reform must be in place for 10 years. How
do you do that? They get rid of the health care act--well, they're
trying to anyway--and yet they use every dime for the first 10 years to
pay for the bill.
{time} 0940
How do you do that? I'm anxious to see how you do this.
Just as their 2012 budget was paid for by health reform savings, and
we've discussed this in the budget committee, this bill is again paid
for by the health reform which they want to annihilate. If the majority
is against the health reform bill, perhaps they should stop making
their agenda so dependent upon it.
While I support H.R. 674, we cannot pat ourselves on the back and
claim victory that this is a victory for jobs. Congress must do much
more.
Mr. HERGER. Mr. Speaker, I yield 2 minutes to the gentleman from
Minnesota (Mr. Paulsen), a distinguished member of the Ways and Means
Committee.
Mr. PAULSEN. I thank the gentleman for yielding.
Mr. Speaker, I also rise in favor of H.R. 674, a bill that will
repeal this ill-conceived 3 percent withholding rule for all government
contractors, including private hospitals that accept Medicare or
Medicaid payments and those who provide even lunches for schools.
This is one area in which Republicans and Democrats are working
together, as even President Obama singled out this provision as
burdensome to our Nation's job creators. The President, in his jobs
plan, he proposed delaying this rule. The very fact that this rule
continues to be delayed and has not been implemented since being first
created in 2005 just tells you how bad of an idea it truly is. But we
shouldn't just delay it; we should eliminate it and repeal it
immediately.
I've spoken with many small businesses in my district that will be
negatively impacted by this law because the profit margin for many of
these companies that have government contracts is right around 3
percent.
One Minnesota company, Valley Paving, says that withholding 3
percent, the new 3 percent withholding law would be catastrophic on
their balance sheet, meaning that covering costs, paying bills, and
just covering operating costs would be a challenge. And as they point
out, during these hard economic times, withholding more money from our
small businesses like themselves would be that they most likely would
not be able to update their equipment, not grow as fast, and not be
able to hire more people.
Mr. Speaker, this goes against everything that Washington should be
doing, giving our employers certainty to create more jobs. This law
needs to be repealed.
Another contractor in my district, Hardrives, Incorporated, pointed
out the Federal Government does not need to be playing banker with our
earned income.
This law may have sounded like a good idea on paper but, in practice,
it will be disastrous. This is made evident by the cost of the program
itself. Implementing it for the Department of Defense alone is
estimated to cost about $17 billion over 5 years.
And here's the irony, Mr. Speaker. The program is forecast to bring
in a little over $11 billion across the whole spectrum of government.
So the program is going to cost more to implement than it will take in.
I strongly urge support of this commonsense approach and bipartisan
approach on adopting this bill. The President supports the pay-for.
I thank the member of the Ways and Means Committee, Mr. Herger, and I
ask for its support.
Mr. HERGER. Mr. Speaker, I advise the gentleman from Michigan that I
am prepared to close.
Mr. LEVIN. In closing, I support this legislation. It should not have
been passed in the first place. It was not vetted effectively by the
then majority. It's time. We tried before. It's time to now support
this bill.
I yield back the balance of my time.
Mr. HERGER. Mr. Speaker, I yield myself such time as I may consume.
I would like to reference the Statement of Administration Policy on
this bill. In this letter from the President, just to quote from it,
``The Administration supports passage of H.R. 674, which would repeal a
3 percent withholding on certain payments made to private contractors
by Federal, State, and local government entities.''
``The effect of the repeal of the withholding requirement would be to
avoid a decrease in cash flow to these contractors, which would allow
them to retain these funds and use them to create jobs and pay
suppliers.''
Mr. Speaker, jobs are the number one priority of the American people,
and jobs should be the number one priority of this Congress. Many
initiatives that are billed as ``creating jobs'' are controversial.
This is not. We're repealing a tax that hurts small businesses and that
will cost the government more to implement than it collects. This is a
win-win-win for businesses, workers, local public services, and
taxpayers.
I urge all Members to vote to repeal the 3 percent withholding tax
and create new jobs now.
With that, I yield back the balance of my time.
Executive Office of the President, Office of Management
and Budget,
Washington, DC, October 25, 2011.
Statement of Administration Policy
H.R. 674--Repeal of the Three Percent Withholding on Government Vendors
(Rep. Herger, R-CA, and 269 cosponsors)
The Administration supports passage of H.R. 674, which
would repeal a three percent withholding on certain payments
made to private contractors by Federal, State, and local
government entities.
The repeal of the withholding requirement in H.R. 674 would
reduce a burden on government contractors who otherwise
comply with their tax obligations, particularly small
businesses. As evidenced in the President's
[[Page H7143]]
proposed American Jobs Act, released September 12, 2011, the
Administration has supported alleviating this burden, which
was originally enacted into law on May 17, 2006. The
Administration also believes it is important to ensure that
Federal contractors are compliant with tax laws and supports
more targeted efforts that prevent persons with outstanding
tax debts from receiving Federal contracts. The effect of the
repeal of the withholding requirement would be to avoid a
decrease in cash flow to these contractors, which would allow
them to retain these funds and use them to create jobs and
pay suppliers. This would complement the Administration's
other efforts to help small businesses. Repeal of the
withholding requirement would also reduce implementation
costs borne by Federal and other governmental agencies. The
Administration would be willing to work with the Congress to
identify acceptable offsets for the budgetary costs
associated with the repeal, which could include but are not
limited to ones that are in the President's detailed
blueprint outlined to the Congress on September 19, 2011.
Mr. JOHNSON of Illinois. Mr. Speaker, H.R. 674 is an extremely
crucial piece of legislation that will permanently repeal the 3 percent
withholding requirement on all government contracts. Once before, the
tax's implementation date had been extended. H.R. 674 will remove any
uncertainty from contractors that this tax would eventually be placed
upon them.
During these difficult economic times, this extra tax would limit
access to capital, increase operating expenses, and take money out of
local economies fortunate enough to have contracts to build
infrastructure. That means, not only would businesses be burdened, but
whole communities as well, because these local contractors would not be
able to hire more local workers. As a result, infrastructure projects
would slow, further burdening businesses, communities, and citizens
that rely on infrastructure for transportation to work, running water
for their families, and interstates to move goods and services.
To further exemplify my support for H.R. 674, of which I am a
cosponsor, prior to final passage, I will vote against the Motion to
Recommit. This vote will drastically alter the bill and negate any
positive affect this bill will have on the American economy.
Mr. MARCHANT. Mr. Speaker, to my constituents in Texas, two things
lay at the heart of this bill. The first is that the repeal of the 3
percent withholding requirement removes unreasonable burdens on
contractors doing business with federal, state, and local governments;
the second is that it creates a more stable economic environment to
conduct business, create jobs and get America moving in the right
direction.
The legislation before us repeals a requirement that may have been
well-meaning but was ultimately misconceived. Whatever the original
purposes of three percent requirement, the outcome would be disastrous.
Much-needed capital would be kept out of the hands of cash-strapped
businesses across the country. And local and state governments--facing
historic budget pressures--would be saddled with even more additional
administrative and compliance costs on basic goods and services.
At a time when business investment is essential to revitalizing our
economy, repealing the 3 percent withholding rule is the kind of
federal action that aids economic growth and makes possible an increase
in private consumption and demand. H.R. 674 is a thoughtful,
commonsense, bipartisan bill that strengthens our economy, and I urge
my colleagues to support this legislation.
Mr. CONNOLLY of Virginia. Mr. Speaker, I am proud to be an original
sponsor of this important bipartisan legislation, which will remove a
sizable impediment to job creation in the private sector.
Repealing this burdensome 3-percent withholding regulation will offer
predictability and free up capital that employers have been holding in
abeyance. Those dollars now can be used to create jobs, increase wages,
or fund business investments that will benefit our local economies.
That is why a diverse coalition of industry and government--including
retailers, telecom, and local and state government associations--
strongly support this repeal.
The federal government has a historic partnership with the private
sector supporting research and innovation, which has led to job
creation and economic growth. Allowing this ill-conceived regulation to
go into effect would damage that partnership at the very time we need
to be collaborating more with the private sector.
This is one repeal that enjoys bipartisan support from the House and
Senate, the President and the business community. I urge my colleagues
to support it and to keep this private capital where it belongs--in the
hands of our job creators.
The SPEAKER pro tempore. All time for debate has expired.
Pursuant to House Resolution 448, the previous question is ordered on
the bill, as amended.
The question is on the engrossment and third reading of the bill.
The bill was ordered to be engrossed and read a third time, and was
read the third time.
The SPEAKER pro tempore. Pursuant to clause 1(c) of rule XIX, further
consideration of the bill is postponed.
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