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Push to Repeal Contractor Withholding Tax Paused

Photo: Andrew Brown

There seemed to be wide agreement from both sides of the aisle in Congress, plus the Obama administration, on repealing a law requiring the government withhold 3 percent of all contracts.

However, the push to repeal the law has hit some stumbling blocks as the two parties disagree on how to make up for the revenues lost by repealing the provision, according to a report by The Hill.

Republicans proposed withdrawing unobligated discretionary funds to cover lost revenues, but that measure failed to clear a procedural vote in the Senate Thursday.

The House is expected to pass its repeal measure Thursday, which includes a separate tax bill that would tighten Medicaid eligibility requirements.

Senate Budget Committee Chairman Kent Conrad said he expects the Senate to take up an alternative measure when the Senate returns from a one-week break.

In his jobs plan, President Obama proposed delaying the withholding rule until 2014. The Internal Revenue Service has delayed implementing the rule until the end of 2012, but business groups such as the U.S. Chamber of Commerce are pushing for a full repeal.

“Bottom line, we need to fully repeal the 3 percent withholding tax now,” a Chamber statement said.

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