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Committee Approves Legislation to Repeal 3 Percent Withholding Rule and Modify the Income Definition for Certain Health Care Programs

October 13, 2011

Washington, DC – Today, the Committee on Ways and Means favorably reported out two bills: H.R. 674, sponsored by Rep. Wally Herger (R-CA) and Rep. Earl Blumenauer (D-OR), to repeal the 3 percent withholding rule on certain payments made to vendors by government entities and H.R. 2576, sponsored by Rep. Diane Black (R-TN), to align the income definition for certain health programs to more closely reflect how it is measured in other federal means tested programs.  Both bills were voted out of Committee on a bipartisan basis.  The Members released the following statements after the markup:
Chairman Camp: “The Committee is building on its pro-jobs record and I am optimistic that these Committee bills, like 1099s, the trade agreements and TAA, will enjoy broad bipartisan support.  Repealing the 3 percent withholding rule is a major step toward reducing uncertainty for businesses and allowing job creators to hire.  I am also glad we were able to secure bipartisan support for H.R. 2576, which will align the income definition for certain health programs with other means tested programs.  These are ideas that both parties and the Administration have shown support for.  I commend both Reps. Herger and Black for the hard work they put into their respective bills.”
Rep. Herger: “Today we have taken an important step in doing what Americans have called upon Congress to do: work together in a bipartisan way to encourage job creation. The 3 percent withholding tax stands in the way of jobs because it threatens to constrict the cash flow of thousands of small businesses that provide goods and services to federal, state, and local government agencies. Permanently repealing this tax is an important step toward giving these businesses the assurance that it’s safe to invest, grow, and hire more workers. We’re looking for actions Congress can take to create jobs right now. This is a win-win. I urge all members to support this legislation.”
Rep. Black: “This common sense, bipartisan solution would bring Medicaid back into line with other federal assistance programs and ensure the program is there for those in most need. Not only that, according to CBO/Joint Tax Committee estimates, this bill would save taxpayers approximately $13 billion over ten years.  Considering our $14 trillion in national debt, closing this loophole as soon as possible is good policy on a number of levels.”  

Vote Information
H.R. 674 was passed on a voice vote
H.R. 2576 was passed 23-12, with (22 Republicans, 1 Democrat voting in favor of passage and 2 Democrats not voting)