Tax Repeal is in Senate’s Hands
by Karen M. Scally
November 7, 2011
Construction industry associations say they are hopeful that
what they describe as a job-crushing measure will be eliminated after House
representatives voted overwhelmingly to repeal the federal contractor 3 percent
withholding tax on Oct. 27.
But unless the issue is also taken up by the Senate, the rule
allowing state and federal agencies (and large municipalities) to withhold 3
percent of contractors’ payments will go into effect, starting in 2013.
The Associated General Contractors of America recently conducted a survey [link “conducted a
survey” to the AGC Says New Tax Withholding Measure Will Hurt Construction
Industry article once it’s posted] about the measure, revealing that 55 percent of
construction firms say public projects accounted for more than half of their
revenue in 2010, and 63 percent of firms say their average profit margin for
public projects was less than 3 percent. The AGC says this could force
contractors to carry a loss on public work for months at a time.
Contractors also reported in the survey that if this rule
remains, it will impact their hiring decisions and equipment purchases.
On Oct. 20, a vote by the Senate to take up legislation on
the repeal failed, falling three votes short of the number needed to move the
bill forward. Stephen E. Sandherr, AGC CEO, says now with the House’s vote to
repeal, he hopes the Senate will quickly revisit the issue.
“Helping businesses hire and expand ought to be more important
than forcing them to make an interest-free loan to the federal government,”
Sandherr says. “After all, the only reason this measure was enacted in the
first place was to give Congress an extra $12 billion in temporary funds.”
If you believe this 3 percent withholding tax needs to be
repealed, the AGC has set up a place on their website for you to take action. Click
Here for more information, and let me know what you think about this measure.
*Update- The senate approved a repeal of the withholding tax on Nov. 10 with a 95-0 vote. Construction associations are applauding the decision.
Karen M. Scally
scallyk@bnpmedia.com
Karen M. Scally is the editor of Site Prep.
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