NSBA ApplaudsThree Percent Withholding Repeal

November 17, 2011


Molly Brogan



Washington, D.C. – On Nov. 16, the House passed H.R. 674, effectively repealing the NSBA-opposed and highly burdensome three percent withholding tax mandate enacted as a pay-for in the Tax Increase Prevention and Reconciliation Act of 2005. Below is a statement from NSBA President Todd McCracken applauding Congress and the administration for their efforts to repeal this onerous mandate.

“Repeal of this unfair mandate has been a long-time coming and something NSBA members worked hard to achieve. The three percent mandate exemplifies the problem posed by a lack of understanding of all ramifications—both direct and indirect—of a law or regulation before it is put into place.”

“I applaud the House and Senate for working to make this widely supported, bipartisan law a priority, and also applaud the administration for their support of repeal. These combined efforts send a strong message to a small-business community that is plagued with uncertainty: Congress CAN, in fact, work together to get things done.”

“If allowed to become law, this flawed mandate would have essentially forced companies to provide the federal government with an interest-free loan. Because the three-percent withholding was based on the total cost of the contract, and not merely the profit of the contractor, small firms that do business with any level of government would have faced serious cash flow problems. This is without question the wrong time for the government to do anything to lessen a small-business owner’s capital.”

Since 1937, NSBA has advocated on behalf of America’s entrepreneurs. A staunchly nonpartisan organization, NSBA reaches more than 150,000 small businesses nationwide and is proud to be the nation’s first small-business advocacy organization. For more information, please visit www.nsba.biz .