House Votes to Repeal Contractor Withholding Tax

October 27, 2011

The House voted 405-16 on Thursday to repeal a law requiring governments at the federal, state, and local levels to withhold 3 percent of what they would pay most contractors until those vendors have fully paid their taxes.

But it remains uncertain what the Senate will do.

Last week, Senate Democrats prevented similar legislation from reaching the floor; they objected to covering the cost of the repeal by directing the executive branch to rescind funds and make further cuts to discretionary spending in 2012. The White House threatened to veto that measure because of those pay-fors.

But the Republican-pushed House bill passed on Thursday would cover the cost of undoing the contractors' tax with a fix to the 2010 health care law that would tighten Medicaid eligibility requirements, saving $14 billion. That fix was passed earlier on Thursday, 262-157. 

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