Economy priority one in U.S. House
October 29, 2011
This week the House of Representatives continued to make reviving the economy its number one priority by passing H.R. 674. This bill ended a 3 percent phantom “tax” on government contracts. This new tax on doing business with the federal government was immediately criticized, and its implementation was delayed on two separate occasions.

Despite the delays, the IRS’s final rule stipulated that the provision would go into effect on January 1, 2013. I cosponsored H.R. 674 because it gives our local businesses certainty as they look forward and plan for the next several years. They no longer need to worry about a looming tax being held over their heads, disrupting their cash flows and stifling job creation. They no longer have to hope for additional delays that would postpone this requirement on a year-to-year basis and are finally granted certainty that this misguided tax will be gone forever.

But beyond giving relief to both small and large businesses in the private sector, H.R. 674 also offers relief to governments as well. Because this original requirement forced federal, state and local governments to comply with new administrative burdens, it was criticized as far back as 2006 as being an unfunded mandate, increasing the costs not just on businesses but on governments as well. This would have had created a “double whammy” by not just decreasing the resources available to governments to enter into contracts and create jobs, but it would have also made these same contracts less affordable for businesses, reducing their ability to hire workers.

Passing this bill was part of the House Republican’s jobs and growth agenda, but this bill gained bipartisan support. It passed the House 405-16, and included both Democrat and Republican cosponsors. Like our earlier successful efforts to repeal a costly “1099” reporting requirement, the passage of this bill shows that we are serious about eliminating unnecessary and harmful policies, and that when possible we will reach across the aisle to do so.

H.R. 674 now will move to the Senate, where it joins a list of 15 other job creating bills that await votes on the Senate floor.