Congressman Gerry Connolly joined President Obama at the White House today for the signing of legislation he cosponsored to repeal a burdensome 3 percent tax withholding regulation on private businesses and state and local governments.
The bill also contains provisions to put veterans back to work by providing tax credits for businesses that hire veterans and those with service-related disabilities, and establishing training programs to help veterans return to the civilian workplace.
Repeal of the 3 percent withholding provision is particularly important to Northern Virginia, with its large concentration of government contractors and vendors, Connolly said.
“Repeal of this withholding regulation will offer predictability to businesses that provide services to governments at every level. It will free up capital that private sector employers can use to create jobs, increase wages, or fund business investments that will benefit our economy,” Connolly said.
“Repealing this regulation once and for all will provide businesses with greater predictability, remove undue government intrusion into their operations, and free up resources to expand and create jobs,” Connolly added. If allowed to stand, the regulation would cost $75 billion over the next five years.
The withholding provision also creates an administrative nightmare for federal, state, and local governments, Connolly said. “An estimated 20 percent of counties throughout the nation have more than $100 million in annual expenditures that would be subject to this withholding.”
Current law, passed in 2005 under the Bush Administration, placed a 3 percent tax withholding requirement on government contractors, vendors, Medicare providers, and farmers. Since then, a number of bipartisan efforts in Congress have delayed implementation of the withholding regulation. “The well-meaning intent of the law was to go after a small numbers of bad actors who were cheating the federal government, yet the broad-brush approach to the problem created more problems than it solved,” Connolly said.
The veterans’ provision of the bill – known as the VOW to Hire Heroes Act – was added to the legislation in the Senate and passed the House last week by a vote of 422-0.
“Our service members, our veterans, and their families have made incredible sacrifices for our nation. The least we can do is take the steps necessary to make sure they have the training they need to get jobs to provide for themselves and their families,” Connolly said, noting that one-in-four Iraq and Afghanistan veterans are unemployed. “By enacting this veterans’ jobs act, our nation is taking a major step forward to fulfill our responsibility to the men and women who fought to protect our values and our security.”