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Today Jaime Herrera Beutler helped advance the elimination of the 3% withholding on government contractors, a bipartisan jobs bill that was today approved by the U.S. House of Representatives. 

Jaime joined the bill’s original sponsors, Representatives Earl Blumenauer (D-OR) and Wally Herger (R-CA), by both cosponsoring and voting for the permanent elimination of this “suspicion tax” on employers who accept government contracts.  The 3% withholding of certain payments to contractors doing business with local, state and federal governments was intended to ensure tax compliance. 

However, small businesses and other employers have raised concerns that the suspicion tax would impede cash flow, disrupt their operations and hurt their ability to hire.  The withholding rule has not yet taken place; the IRS has most recently postponed its implementation date from January 1, 2011 to the end of 2013.  Businesses and employers have strengthened their opposition during this time of slow credit flows and decreased revenue.   Other potential effects could be higher bids by those competing for government contracts, an extra cost that would be passed on to taxpayers.

“In the interest of doing everything we can to eliminate obstacles to job creators, Democrats and Republicans in Congress teamed up today to pass this jobs bill,” said Jaime Herrera Beutler.  “I’m pleased to be a cosponsor of this effort to eliminate what is essentially an interest-free loan to government by employers and small businesses.  I’ll continue to cut through the partisan clutter to support bipartisan solutions that have a chance to become law.”

President Obama has signaled he’ll support the 3% withholding rule bill passed by congress.