Mr. SCOTT of South Carolina. House Resolution 448 provides for a closed rule for the consideration of H.R. 674, a bill 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 H.R. 2576, to amend the Internal Revenue Code of 1986 to modify the calculation of modified adjusted gross income for purposes of determining the eligibility for certain health care-related programs.
Mr. Speaker, I rise today in support of this rule and the underlying bills. What we have here is something very simple: a bill to save jobs in America and a way to pay for it through a simple technical fix in the Patient Protection and Affordable Care Act, which is supported by the President and many Democrats in this Chamber.
H.R. 674, or what I call the Saving American Jobs Act, would repeal the 3 percent withholding requirement on government payments to businesses, both large and small. This is truly a bipartisan bill with more than 60 Democrats among the 269 cosponsors. Even the President supports changing the withholding tax. The tax is a job killer, plain and simple.
Beginning January 1, 2013, government agencies at all levels--Federal, State and local--will have to withhold 3 percent of their payments to businesses for goods and services. For many small businesses, this has the potential to completely wipe out their profit margins. At a time when we have a desperate need to create jobs and to create the environment for job creation, the withholding tax does the exact opposite. For many State and local governments, the implementation costs will be huge at a time when their budgets are already stretched thin.
For example, in my home State of South Carolina, the State Comptroller estimates the implementation costs associated with this tax will take up 11.5 percent of its budget. This tax punishes all businesses for the sins of a few, automatically and wrongly assuming all job creators who do business with the Federal Government are somehow evading full taxation. The last I checked, we should be encouraging people to follow the law, not penalizing them for doing so.
The tax also treats all businesses the same regardless of their taxable incomes. In the construction industry, for example, where unemployment is currently at 13.5 percent, companies rarely have a pretax profit margin of more than 3 percent. Therefore, a 3 percent withholding tax would completely wipe out their profit margins. As a former small business owner myself, I can assure you this is not the kind of math that leads to job creation.
This tax will also harm local governments that are already hurting for dollars by placing on them an unfunded mandate to collect a Federal tax. Again, as former chairman of the Charleston County Council, this is more math that just doesn't add up.
With unemployment still at 9 percent, our job creators need capital to invest and long-term certainty in the Tax Code. Taking hard-earned dollars away from our job creators will only lead to higher prices, lower wages, and lost jobs.
Once again, Mr. Speaker, I rise in support of this rule and the underlying legislation. I encourage my colleagues to vote ``yes'' on the rule and ``yes'' on the underlying bills, and I reserve the balance of my time.
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Mr. SCOTT of South Carolina. Mr. Speaker, it's odd that as the American people continue to watch Congress asking for a bipartisan approach to what we do here, it's very odd for us to find ourselves in that position today saying to the American people, we are finally on the right page of a bipartisan approach. And as it relates to the whole undermining of the health care act, the President himself has released a statement, an administration policy statement, that simply says that he supports H.R. 2576.
The fact of the matter is if we are going to find ways to save Medicaid and keep it available for the next generation, we must do things in a bipartisan approach that actually solve the problems without increasing the system necessarily.
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Mr. SCOTT of South Carolina. I would just encourage my friends on the left who want to raise taxes, raise taxes if you can, but the bottom line is that raising revenues does not make you more responsible, does not make you use the revenues that you currently have more responsibly. So the notion of raising taxes to use that as a fix to this situation is inconsistent with the reality and is part of the alternate universe that we ought not be a part of.
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Mr. SCOTT of South Carolina. Mr. Speaker, we find ourselves at a place where we should have been at for many, many months, and that is working in a bipartisan way to save American jobs.
Mr. Speaker, it is amazing that we have this opportunity to have the President's support with those of us on the right, to have the Democrat leadership joining us, 269 cosponsors on this legislation that simply says to the job creators: We believe in you.
Mr. Speaker, today we have a very simple vote. We can remove an impediment to job creation from the backs of small businesses with no overall increase in government spending. That should be our vote today.
I encourage all of my colleagues to support the rule and the underlying bill.