Payment withholding tax may be soon to end
House Majority Leader Eric Cantor (R-Va.) told reporters on Oct. 3 that the House would vote in October to repeal the 3-percent withholding tax on payments to government contractors.
“The president has my word that over the next month we will make permanent the 3-percent withholding provision from his American Jobs Act,” Cantor said in a briefing with reporters. He didn’t give a specific date though.
The tax repeal is one part of the President Barack Obama’s $447 billion American Jobs Act. Cantor said the House would not pass the whole bill. Instead, the House would work on certain provisions, such as trade issues and the withholding tax.
The 3-percent withholding tax, passed in 2005, has been a concern among business groups even though It has never taken effect. Currently, it’s scheduled to start in 2013.
“Delaying its repeal only continues uncertainty for small business contractors,” Rep. Mick Mulvaney (R-S.C.), chairman of the Small Business Committee’s Contracting and Workforce Subcommittee, said Oct. 3. His subcommittee held a hearing on the tax in May.
In August, Cantor said the tax would be detrimental on both sides, adding to the accounting burden for agencies and choking the cash flow to contractors.
Posted by Matthew Weigelt on Oct 04, 2011 at 10:08 AM