May 29, 2006: Tax Bill Calls for Withholding on Government Contractors
WASHINGTON - A negative element of the new tax-cut bill is beginning to get a lot of attention, reports the Small Business & Entrepreneurship Council (SBE Council). When President Bush signed the legislation, the government took "the unprecedented step'" according to GovExec.com, "of withholding taxes from payments made to federal, state, and local contractors." Under the provision, governments at all levels would be mandated to withhold 3 percent from payments for a range of goods and services. The withholding does not kick in until 2011, and opponents of the bill - government contractors, state and local governments, and allies - vow to repeal the measure.
According to GovExec.com, Sen. Larry Craig (R-Idaho) stated he would revisit the provision even though he voted for the tax bill.