Repealing "3% Withholding Tax"

Press Release

Date: Oct. 27, 2011
Location: Washington, DC
Issues: Taxes

U.S. Representative Martha Roby delivered the statement below regarding her vote on H.R. 674, legislation repealing a job-killing 3% withholding tax. Originally enacted in 2006 and scheduled to take effect on January 1, 2013, Roby voted today to permanently repeal the withholding tax imposed on contractors doing business with federal, state and local governments.

Passed with bipartisan support today, H.R. 674 amends the Internal Revenue Code of 1986 to repeal the imposition of 3% withholding on certain payments made to vendors by government entities. Under the rule, payments made to contractors doing business with state, local and federal governments are subjected to a 3% withholding tax.

"In our uncertain market, employers should have access to resources helping them expand their businesses and hire new workers. They should not be held down by harmful tax regulations. The 3% withholding tax greatly compromises U.S. job creation - mainly on the local level - by mandating administrative requirements on businesses. Instead of punishing employers with more taxes, we need to be restoring confidence in our local businesses and encouraging job growth.

"Supporting this legislation, I joined with House colleagues in a bipartisan effort by finding common ground to get our economy back on track. I proudly support this repeal and remain fully committed to working on initiatives to bring jobs back to the American people. I hope that the Senate and the President will follow this bipartisan lead and repeal this tax to get our country moving in the right direction."

Roby said that numerous local businesses and government officials in Alabama's Second Congressional District voiced their support for the legislation.