Repealing withholding tax costs billions in federal revenue, CBO finds
A bill that would repeal the 3-percent withholding tax on contractors is on its way through the House with a lot of support. However, the Congressional Budget Office has raised a critical point: Repealing the tax would reduce revenues by an estimated $11.2 billion between 2012 and 2021, according to a cost estimate report on the bill, H.R. 674.
Because enacting the legislation would affect revenues, pay-as-you-go procedures apply too, CBO reported.
Nevertheless, the repeal has a lot of support. The bill’s list of sponsors is longer than the bill itself, and it has the Obama administration's backing. .
The House Ways and Means Committee approved the legislation Oct. 13, and House leaders plan to vote on the bill next week, according to reports. The Senate has its version of the legislation, but senators have not passed it either.
There's an important counter-argument to the CBO report: The government has not yet made a dime from the tax, as Congress has deferred its implementation. It's currently set to take effect in January 2013.
Posted by Matthew Weigelt on Oct 19, 2011 at 2:01 PM