Today, the U.S. Senate will vote on a motion to proceed to a House-passed bill (H.R. 674) which repeals the costly and onerous 3% withholding tax on government contractors. The motion is expected to pass (60 votes needed), but there could be changes to the bill regarding its "pay for."
We've heard that Senator Harry Reid (D-NV) may tax "private jet owners" to pay for the repeal bill. This is silly as such a tax would hurt general aviation -- which is dominated by small businesses. Many small firms and organizations in rural areas also use small planes to conduct important/day-to-day business.
The bottom line is that the House-passed bill overwhelmingly advanced by a vote of 405-16. President Obama also supports the bill. Why the heck would Harry Reid hold it up?
SBE Council sent a letter to the Senate today urging quick passage. SBE Council President & CEO Karen Kerrigan wrote:
"Repealing the 3 percent withholding tax makes economic and fiscal sense. The cost of the withholding mandate to governments will far exceed its anticipated revenue gains. Furthermore, small firms will become less able to compete for government contracts due to the anticipated cash flow issues, higher costs and the bidding constraints that the mandate will produce.
"Repealing this counterproductive mandate will help small contractors preserve capital. In addition, governments at all levels will be allowed to save precious funds currently being expended or allocated to establish bureaucracies for implementing this unnecessary mandate. SBE Council members have reported that the mandate will create serious cash flow issues for their firms, and prevent many from bidding on government contracts. Some have reported they will raise prices in order to cover the cost of the mandate. In the end, taxpayers will lose.
"Repealing the 3 percent withholding mandate makes economic and fiscal sense. With the cost of the mandate far exceeding anticipated revenue gains, and small firms becoming less able to compete for government contracts because of new cost and regulatory constraints, repealing the mandate makes sense. Taxpayers, small businesses and governments at all levels will benefit from repeal."
Indeed the time is now for the Senate to get moving! To start acting on some of these House-passed bills to help entrepreneurs! You may want to give your Senators a nudge at 202-224-3121. Tell them to pass H.R. 674 without changes!