Most Read: Politics

Read In

Now Viewing: People from around the country looking at Post Politics section

See what's being read across the country ›

Social Surface: Politics

2chambers
Posted at 12:22 PM ET, 10/27/2011

House approves tax change for government contractors

The House has overwhelmingly approved a measure to repeal a tax provision that government contractors said would have been a burden if it had gone into effect on schedule in 2013.

The proposal had been widely embraced by Republicans and Democrats, and President Obama included a similar idea in his $447 billion jobs package. Even so, a bill to adjust the tax provision stalled in the Senate last week as Republicans and Democrats argued over how to pay for it.

By a bipartisan vote of 405 to 16, the House agreed to eliminate the new rule that would have required federal, state and local governments to withhold 3 percent of their payments to vendors.

The idea behind the rule had been to ensure government contractors paid their taxes, after a number of studies showed that vendors sometimes fail to pay all they owe. Much like individual taxpayers, the businesses would have received a refund at tax time if the figure represented more than they owed.

But government agencies complained the withholding could be expensive to administer. And businesses said that with thin profit margins, they could not afford to have 3 percent of their government payments withheld.

The implementation of the provision had been delayed twice already. The House bill would eliminate it altogether--and pay for the approximately $11.1 billion in projected revenue loss with another proposal also approved by a 262 to 157 vote on Thursday that would slightly tighten eligibility requirements for Medicaid and Medicare.

Democrats had expressed some concern about that idea, but passage of both measures was assured earlier this week when the White House announced it supported them.

The Senate could take up the House’s bill as early as next week. With the bipartisan House vote and the support of the president, it will likely be more easily passed this time.

In a statement, House Majority Leader Eric Cantor (R-Va.) said called the bill a “bipartisan and common sense solution to support the small business men and women of our economy so that they can begin to support and begin to regenerate our ailing economy.”

He said its passage showed that Republicans are eager to find common ground with Democrats on jobs proposals--despite President Obama’s claims that the GOP is blocking his jobs ideas.

By  |  12:22 PM ET, 10/27/2011

 
Read what others are saying
     

    © 2011 The Washington Post Company