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Crenshaw Votes to Repeal Three Percent Withholding Tax Rule

Press Release

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Continuing to back job creators in their mission to boost employment around the nation, Congressman Ander Crenshaw today (10/27) voted to permanently repeal the 3% withholding tax requirement on vendors doing business with federal, state, and local governments.

The House passed the legislation (H.R. 674) and sent the bill to the U.S. Senate for consideration.

"Now is not the time to block employment, impede cash flow, and further undermine job creation. That's why I voted to permanently repeal the 3% withholding rule," said Crenshaw. "Eliminating this tax will let job creators keep valuable capital to create the jobs rather than send it on to the federal government."

"In this struggling economy job creators don't have rainy day funds to pay for needless taxes," Crenshaw continued. "This wrong-headed approach only leads to higher prices, lower wages, and lost jobs."

BACKGROUND: The 3% withholding rule was scheduled to take effect on January 1, 2011. The provision requires government agencies at all levels (federal, state, and local) to withhold 3 percent of their payments to businesses for goods and services. This amount is held as a down payment of the business's federal income tax liability.

Because of strong concerns raised by employers and government entities about the economic burden it could create, the rule's effective date was delayed until January 1, 2013. H.R. 674, which has received strong bipartisan support, would permanently repeal the tax. The legislation has been strongly supported by a broad coalition of business groups, including the Chamber of Commerce, National Association of Manufacturers, and National Federation of Independent Businesses.

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