July 7, 2008: New Bill Proposes Repeal of 3 Percent Withholding Tax on Public Contracts
July 7, 2008
WASHINGTON - Sen. George Voinovich (R-Ohio) has introduced the Manufacturing, Assembling, Development and Export in the USA Tax Act - or MADE in the USA Tax Act. One of the provisions of the bill is to repeal the 3 percent withholding tax on government contracts scheduled to take effect on Jan. 1, 2011.
The primary purpose of the proposed legislation is to eliminate tax breaks that encourage companies to move jobs overseas. Voinovich noted that the additional revenues would be used to cut tax rates on large and small businesses that invest and create jobs in the United States.
Specific provisions of the MADE in the USA Tax Act include:
• Cutting the U.S. corporate tax rate from 35 percent to 28 percent;
• Increasing the domestic activities deduction for small businesses;
• Making permanent the 2003 expansion in small business expensing; and
• Repealing what Voinovich calls “the burdensome 3 percent withholding requirement for contractors.”
According to Voinovich, these tax reforms would help create higher paying jobs in the United States and would be paid for in a fiscally responsible manner by repealing a number of existing tax breaks that favor foreign competition and that encourage companies to move jobs and profits overseas.
“My colleagues and I have a historic opportunity, through fundamental tax reform, to transform the U.S. economy in a manner that will make our nation stronger and more prosperous for generations,” Voinovich said. “My legislation addresses one large piece of tax reform, in the hopes of starting a conversation that will inform policymakers as we develop a more comprehensive reform in the next couple of years.”
Publication date: 07/07/2008