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Public Statements

Job Creators & Chamber of Commerce Join Small Business Committee Member's Call for Repeal of the 3% Withholding Tax This Fall

Press Release

By:
Date:
Location: Washington, DC

During a press conference today, Small Business Subcommittee on Contracting and Workforce Chairman Mick Mulvaney (R-SC), Ways & Means Committee Member Rep. Wally Herger (R-CA), U.S. Chamber of Commerce Vice President Giovanni Coratolo and small business owners called on President Obama and Senate Majority Leader Harry Reid to support repeal of the 3% withholding tax as part of the Fall job creation agenda.

The President mentioned in his jobs speech last Thursday that his plan will include paying small businesses with government contracts faster than before. However, the administration expressed support for just a delay of the withholding rule, not full repeal, which continues uncertainty for small business contractors.

Chairman Mulvaney said, "During the President's joint address to Congress, he announced that his new job creation agenda would include paying small business contractors faster. I applaud the administration's new initiative to speed up contracting payments and I'm pleased that the President realizes that timely payments are key to small businesses. I also hope that he would then support efforts to repeal a provision that will keep payments from small businesses for not just 15 or 30 days, but for over a year. He could do this by supporting H.R. 674.

"The President must know how damaging the 3% withholding rules are, as his Jobs Act calls for an additional year delay in its implementation. But if it is so harmful to small business --- which it is --- why not repeal it outright? Majority Leader Eric Cantor has signaled that the repeal of this job-crushing withholding requirement will be on the House agenda this Fall. I hope that the President & Senate Majority Leader Harry Reid will also support this repeal. The 3% withholding tax would hurt small business cash flow and job growth. Delaying its repeal only continues uncertainty for small business contractors. Permanent repeal will provide more certainty and help create jobs now."

Rep. Herger said, "I'm extremely pleased that House Leadership has made full repeal of the 3% withholding provision a top priority. This reflects our commitment to getting Americans back to work. It's an important step to restoring certainty for small businesses so they can plan for the future without another unfair, burdensome tax provision standing in the way of reinvestment and job creation. The 3% withholding tax will harm small businesses as well as state and local governments. We need to get it off the books once and for all to avoid placing small businesses, jobs across America, and our economic recovery efforts at greater risk. I look forward to working with House Leadership to ensure that we get this bill passed to help our economy."

Vice President of Small Business Policy for the U.S. Chamber of Commerce Giovanni Coratolo, said, "The 3% withholding tax will have a dramatic, negative impact on honest taxpaying businesses across the United States--hurting their ability to create jobs and get the economy back on track. We are grateful that the House leadership has made passing a repeal of the 3% withholding tax a part of its "to do" list for this fall, and we're grateful for the persistent leadership of lawmakers like Congressmen Wally Herger and Mick Mulvaney on this critical issue. And while some in Washington DC are proposing to delay its implementation again, we believe that if the 3% withholding tax is harmful enough to small businesses and such an impediment to job creation to justify delaying it, then let's repeal it once and for all. Repeal will give everyone impacted, such as businesses, doctors, farmers, state and local governments, and colleges and universities, greater certainty and not simply delay the inevitable pain this unnecessary mandate would inflict."

Section 511 in the Tax Increase Prevention and Reconciliation Act of 2005 requires federal, state & local governments to withhold 3% from all payments for goods & services, including from small businesses. The American Recovery & Reinvestment Act deferred the effective date of this withholding to Dec. 31, 2011, and in May of this year, the Internal Revenue Service (IRS) delayed it again until Dec. 31, 2012. Three bipartisan bills before Congress seek to repeal the 3% withholding requirement: H.R. 674 (235 co-sponsors); introduced by Rep. Wally Herger (R-CA), S.89; introduced by Senator David Vitter (R-LA) and S. 164; introduced by Senator Scott Brown (R- MA).

Participating Members at this press conference included Small Business Subcommittee on Contracting & Workforce Chairman Rep. Mick Mulvaney (R-SC); Ways & Means Member & Repeal Bill (H.R. 674) sponsor Rep. Wally Herger (R-CA); Rep. Joe Walsh (R-IL); and Rep. Richard Hanna (R-NY).

Participating Chamber of Commerce officials and business owners included Giovanni Coratolo, V.P. of Small Business Policy, U.S. Chamber of Commerce; Terry Neimeyer, President & CEO, KCI Technologies in Sparks, MD; David Kellogg, President & CEO, Solers in Arlington, VA; Phil Soucy, Co-President & CEO, Modern Technology Solutions, Inc. in Alexandria, VA; Rich Spicer, VP, Tyler Construction Group in Columbia, SC; and Steve Reynolds, CFO, ELDECO, Inc. in Greenville, SC.


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