Legislation cosponsored by Congressman Jim Himes (CT-4) and passed by the U.S. House of Representatives unanimously late yesterday will help vendors that do business with governments keep more of their profits and create jobs. H.R. 674 repeals a 2006 law that would have required federal, state, and local governments to begin withholding three percent of payments due to government contractors in an effort to improve tax compliance. The bill also encourages businesses to hire veterans.
"At a time when businesses and local governments are struggling to make ends meet, restricting their cash flow just doesn't make sense," said Himes. "This legislation eliminates an unfair provision that made it harder for small businesses to sell their services to governments and will help our veterans find work when they return home and enter the civilian workforce."
Bridgeport Mayor Bill Finch and Connecticut Comptroller Kevin Lembo have been strong advocates for repealing this provision, citing the cost of implementing the measure and its unfair impact on small business cash flow. If implemented last year, the law would have forced the state to withhold $170 million from businesses -- whether or not they were liable for the money. That money could otherwise be reinvested in the company or used to hire new employees.
"A major setback to our small business community was prevented thanks to the repeal of this provision. During the last four years, we've seen major growth and success in our small and minority-owned businesses," Finch said. "With the repealing of this provision, small businesses can continue moving forward and creating jobs and opportunities for our residents. Thank you to Congressman Himes for doing the right thing, and thanks to our state Comptroller Kevin Lembo for taking an active role on this issue."
"This repeal is a critical victory for Connecticut businesses -- eliminating a law that would have forced me to deprive full payments to thousands of companies that do business with the state," Lembo said. "Businesses deserve full and prompt payments for the products and services they provide us. I commend our congressional delegation for eliminating a law that would have jeopardized jobs and cash flow for thousands of businesses at the worst possible economic time. I also thank our Chambers of Commerce, business owners, and others who worked jointly to advocate for this repeal."
The legislation also includes incentives for businesses to hire veterans and provides transition assistance for servicemembers reentering the workforce. The joblessness rate for Gulf War-era II veterans, two-thirds of whom are younger than 35 years old, is 12.1%, up from 10.6% last year. Nearly a quarter of a million are now unemployed, up nearly 30,000 in the last year.