[Congressional Record (Bound Edition), Volume 153 (2007), Part 3]
[Extensions of Remarks]
[Page 3929]
[From the U.S. Government Publishing Office, www.gpo.gov]




              INTRODUCTORY REMARKS FOR SECTION 511 REPEAL

                                 ______
                                 

                         HON. KENDRICK B. MEEK

                               of florida

                    in the house of representatives

                       Tuesday, February 13, 2007

  Mr. MEEK of Florida. Madam Speaker, I rise today, pleased to 
introduce a piece of legislation along with my co-sponsor and esteemed 
Ways and Means colleague, Congressman Wally Herger, that will repeal a 
law that unfairly burdens local governments with annual procurement 
spending over $100 million, which includes Miami-Dade County.
  The legislation would repeal Section 511 of the Tax Increase 
Prevention and Reconciliation Act of 2005 which was slipped into the 
legislation without an up-or-down vote on the amendment.
  Section 511 requires local governments that spend over $100 million 
in procurements, primarily located in large urban centers, to deduct a 
3 percent withholding tax from payments made to their vendors for 
federal income tax purposes. This legislation will become effective in 
2011.
  We have the opportunity with this legislation to help repeal Section 
511 which unfairly burdens our cities and urban centers where many 
people living below the poverty line reside. If Section 511 is not 
repealed, the poor will be further squeezed as the cost of future 
increased procurement contracts will be passed on to the neediest 
people, while services and day-to-day operations may be jeopardized 
too.
  According to Miami-Dade County officials, the withholding tax will 
raise the cost of purchases by 3 percent or more and Miami-Dade County 
would have to absorb an annual increase in the cost of goods and 
services in excess of $57 million, given the annual value of contracts 
for goods and services awarded by Miami-Dade County will exceed $1.9 
billion.
  Small businesses and companies pursuing government contracts, many of 
whom operate on tight margins or irregular cash flows, would also be 
adversely affected in this bid process, while large companies with 
established reserves could better absorb this withholding tax.
  Devolution of taxation down from the federal government to state and 
local governments is a problem that we must fix. This is but one small, 
but very important step toward doing just that.

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