Lankford: Repeal Withholding Requirement

Congressman James Lankford supported passage of H.R. 674, to repeal a 3 percent withholding requirement of payments to companies that do business with federal, state and local governments.

The rule, enacted in 2005, was initially intended to ensure proper payment of taxes but has since become a burden to businesses that constricts cash flow.

The legislation, which had 269 co-sponsors and is supported by the White House, passed the House with broad, bipartisan support in a 405-16 vote.

“While this started as a seemingly well-intentioned piece of legislation, it has become apparent that it will only become another layer of red tape for cash-strapped businesses, state governments and localities,” said Lankford. “I recently talked with a business owner in Tecumseh, Oklahoma, who explained that this rule would severely limit his cash flow due to dipping profit margin. His company would have to increase the price of its bids to compensate for the 3 percent payment which would ultimately lead to higher costs for taxpayers. Removing the withholding of payments to businesses gives them more working capital and fewer compliance costs allowing them to grow their business and hire new workers.”

State and local governments would also suffer negative consequences from the rule with increased compliance costs. City governments in Oklahoma City and Edmond would face tens of millions of dollars in higher contracting bids that could ultimately be passed on the taxpayer, he said.

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