A little-known federal tax that has the potential to bust the budget of your state and local governments, result in higher taxes, and threaten small businesses, doctors and farmers is headed your way.
Few have heard of it, but many will be affected – unless we can stop it before becoming law in 2013.
The “3% Withholding Tax” mandates that federal, state and local governments withhold 3% from payments for goods and services upfront. It sounds harmless enough until you consider the small businesses that rely on every penny of cash flow to keep their doors open and how they’ll be impacted by a 3% loss of revenue.
Last week, the U.S. Chamber announced a grassroots campaign aimed at repealing the 3% Withholding Tax. Visit RepealWithholdingNow.com to learn more about our efforts and sign our National Letter to stop the 3% withholding.
Here’s how the tax would impact you:
• The federal government, as well as your state and local governments, withhold 3% from payments to any business that provides them with a product or service. This may include your local office supply store, local builders, electric company or even a business selling equipment to first responders.
• These businesses will then be forced to raise their prices to make up for the 3% of revenue being held hostage — or simply take a huge hit and risk going out of business.
• Higher prices could drastically impact government budgets, which are already strapped for cash.
• Local or state governments may be forced to raise your taxes to help make up for the budget gap.
Like most things, when you punish small businesses, the whole economy suffers.
Similar to the 1099 mandate included in the health care bill, the 3% withholding requirement was an unrelated offset included in the Tax Reconciliation Act of 2005. Unless repealed, the 3% Withholding Tax will go into effect on January 1, 2013.
In today’s economy, the decks are stacked high enough against employers. The last thing they need is another provision aimed at raising revenue at their expense.
Visit www.RepealWithholdingNow.com and join our efforts to stop the latest burden on business and assault on jobs.
Senior Vice President and National Political Director
U.S. Chamber of Commerce
Repeal Withholding Now repealwithholdingnow.com