U.S. Rep. Kendrick Meek's Withholding Tax Language Included in Chairman Rangel's Tax Collection Responsibility Act

 

Washington, DC – U.S. Representative Kendrick Meek's (D-FL) language delaying implementation of a 3% withholding tax on the value of most government contracts was included in Ways and Means Committee Chairman Charles B. Rangel's Tax Collection Responsibility Act of 2007, H.R. 3056.

The legislation was marked up by the Ways and Means Committee today.

"When Chairman Rangel adds language to his signature bill, you know it is an important issue for him and for the Ways and Means Committee. The momentum is building toward complete repeal of this unfair 3% withholding tax provision. We are one step closer to achieving full repeal," said Congressman Meek. "The private sector Government Withholding Relief Coalition and public sector entities like the National Association of Counties have played an integral part in this process. Today's victory is in large part due to their grassroots lobbying effort."

Congressman Meek's language in the Chairman's bill delays implementation of Section 511 of the Tax Increase and Reconciliation Act of 2005 from 2011 to 2012, and requires the Treasury Department to submit a report to the relevant Congressional committees evaluating the costs incurred to state and local governments, and businesses of Section 511.

Section 511 requires all levels of government with more than $100 million in annual procurement to withhold 3% of the payment for most goods and services procured by that governmental entity. This sweeping and unfunded mandate imposes massive administrative and financial burdens on local governments as they will have to retool their accounts payable systems to implement the new law. This requirement will also sap cash flows needed for day-to-day, private sector business operations and force some companies to alter their business models and pricing schemes when dealing with government customers.

The delay in implementation signals the Committee's intent to find a legislative remedy to repeal the 3% withholding tax.

Congressman Meek's bipartisan legislation, H.R. 1023, has over 180 cosponsors and would repeal section 511 of the Tax Increase Prevention and Reconciliation Act of 2005. Rep. Wally Herger (R-CA) is the bill's original co-sponsor.

"Many people living below the poverty line reside in our cities, counties and urban centers and they deserve more," said Congressman Kendrick B. Meek. "If Section 511 is not repealed, the poor will be further squeezed, while local government services and day-to-day operations would be jeopardized."

Congressman Meek added, "Law abiding, tax paying small businesses and companies pursuing government contracts should not all be punished because of a few bad actors. If implemented, Section 511 would discourage many vendors from bidding on government contracts, reducing competition and increasing prices."

U.S. Rep. Kendrick B. Meek represents the 17^th Congressional District of Florida which includes parts of Miami-Dade and Broward Counties. He serves as the lone Floridian sitting on the House Committee on Ways and Means, and also sits on the House Armed Services Committee.

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