House Readies a Bipartisan "Jobs" BillOctober 19, 2011 - by Donny Shaw
Republicans and Democrats in the House are throwing their support behind a bill to let federal contractors retain more of their payments up front. They’re planning to pay for it by scaling back federal health care subsidies for the poor and middle class.
The House Ways & Means Committee marked up the bill, H.R. 674, last week, and it’s high up on the list of GOP priorities for legislation to help create the conditions for job growth. As of the middle of this week, House aides said GOP leaders seemed to be shooting for floor action next week.
The withholding rule became law in 2005, and was meant to help close the gap between taxes owned and taxes collected. But it was never implemented, and was delayed further under the 2009 stimulus bill until the end of 2011.
Republicans are not the only ones who oppose current law — even President Obama has called the possible withholding rules “burdensome withholding requirements that keep capital out of the hands of job creators.” The IRS earlier this year delayed implementing it again until the end of 2012.
According to the Congressional Budget Office, allowing contractors to retain all of their income up front will cost the government more than $11 billion over the next ten years, presumably because some contractors will find ways to cheat the tax laws and pay less than they actually owe. In order to make up for these losses in revenue, Bloomberg reports that the Republicans are looking at amending the new health care law so that fewer people will be eligible for Medicaid and government subsidies.