Government Withholding Relief Coalition Letter Supporting S. 1725 to Repeal Three Percent Withholding Tax
TO THE MEMBERS OF THE UNITED STATES SENATE:
The Government Withholding Relief Coalition and its member organizations strongly urge you to support
S.1726, a bipartisan bill to repeal the burdensome 3% Withholding Tax mandate enacted in Section 511
of the Tax Increase Prevention and Reconciliation Act of 2005 (P.L. 109-222).
Unless repealed before it takes effect on January 1, 2013, the 3% Withholding Tax will have a dramatic,
negative impact on millions of honest taxpaying businesses as well as state and local governments, health
care providers, farmers and colleges and universities.
For many businesses the profit margin for projects they complete is often less than 3% meaning that the
withholding tax will create significant cash flow problems for day-to-day operations as well as draining
capital that could be used for job creation and business expansion. This mandate is also anti-stimulus in
the sense that it removes money from local economies and sends it to the IRS.
The mandate is already proving costly and will increase exponentially as the implementation deadline
moves closer. If this mandate is not repealed, it will cost companies and governments at all levels
substantial amounts of money just to prepare to comply with this unnecessary and unfortunate tax
provision. These exorbitant expenditures will be at the expense of hiring new employees, expanding
businesses, and providing government services at a time that neither the public nor private sector can
handle such unnecessary costs.
In addition, we strongly support the view that those receiving payments from the government should meet
their federal, state and local tax obligations. However, imposing an onerous 3% Withholding Tax on
transactions between government and honest taxpaying businesses is not the answer.
The Government Withholding Relief Coalition, which represents all sectors of the economy, believes it is
imperative that the 3% Withholding Tax be repealed as soon as possible to limit the damaging impacts to
our economy. We appreciate the bicameral, bipartisan support of efforts to repeal it and strongly
encourage you to vote for S.1726.
Sincerely,
Government Withholding Relief Coalition
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