Congressman Chris Gibson (NY-20) announced that the House unanimously passed bipartisan legislation that will help small businesses and veterans succeed. The bill, considered for the second time in the House after amendments were approved in the Senate, would repeal a provision requiring a three percent withholding tax on contractors doing business with federal, state, and local governments. Additionally, the Senate added significant incentives for employers who hire unemployed or disabled veterans and a provision to update and expand employment training programs for veterans.
"As we look to expand the economy to create jobs, it is imperative that we remove the impediments to growth. Without question, repealing this unnecessary tax that would hurt every small business who works with local, state, or federal agencies accomplishes this goal," said Congressman Gibson. "Additionally, I am very supportive of the amendments added in the Senate, which will help our nation's veterans find productive and meaningful careers when they return to civilian life. As a nation, we must do everything possible to thank and support those who sacrificed so much for our country, and these provisions will benefit both the individual veteran and any business who chooses to join in this effort."
"NFIB/NY strongly supports repeal of this onerous withholding requirement, and appreciates Congressman Gibson's vote for repeal," said National Federation of Independent Business State Director Mike Durant. "This provision would have put a huge burden on small businesses that are already struggling to survive in this tough economy, and is an example of yet another unnecessary government mandate that hurts job creation and economic growth."
Three Percent Withholding Tax
This withholding requirement was originally scheduled to take effect on January 1, 2011, but was subsequently delayed until January 1, 2013 because of concerns about its impact on employers and government entities. The withholding requirement was originally enacted by Congress in 2006 to purportedly improve tax compliance. Three percent of total payments to contractors would be withheld by the local, state, or federal government, even after completion of a project, negatively impacting business' cash flow.
* Tax Incentives for Hiring Veterans: Provides a tax credit to employers of up to $5,600 for hiring a veteran who has been seeking employment for more than six months, as well as a $2,400 credit for veterans who are unemployed for more than four weeks, but less than six months. Up to $9,600 of tax credits are available to employers who hire veterans with service-connected disabilities who have been seeking employment for more than six months.
* Veterans Retraining Assistance Program: Creates a new, three year employment retraining assistance program for up to 100,000 unemployed veterans who enroll in either technical schools or community colleges in an occupation field that the Department of Labor (DOL) determines to have significant employment opportunities
* Changes to the Transition Assistance Program: Mandates that most separating servicemembers participate in the job training workshops provided by the Department of Labor unless they fall into a specific exemption.