White House backs Republican measure repealing 3% tax rule

The White House announced Tuesday that it supports passage of a House Republican bill intended to boost job creation and due up for a vote on Thursday.

The bill repeals a requirement that the federal government withhold 3 percent of payments to contractors as a down payment toward future taxes owed. It was intended to increase compliance with tax laws, but the provision has been delayed repeatedly.

President Obama in his September jobs package proposed delaying the requirement for a year. The issue is a rare instance of agreement between Obama and the GOP on how to address the sagging economy.

{mosads}The White House in an official statement of policy said H.R. 674, sponsored by Rep. Wally Herger (R-Calif.) “would reduce a burden on government contractors who otherwise comply with their tax obligations, particularly small businesses.”

In a nod to priorities of Senate Democrats, the White House also said it “supports more targeted efforts that prevent persons with outstanding tax debts from receiving Federal contracts.” Senate Majority Leader Harry Reid (D-Nev.) has signaled he wants to tie repeal to a provision stopping contracts to those owing taxes.

The White House says it is willing to work with Congress to find a budget offset for the repeal bill, which would be scored as reducing tax revenue.

As a pay-for for the withholding repeal, House Republicans have pointed to a bill sponsored by Rep. Diane Black (R-Tenn.) that changes calculations related to the Obama healthcare reform law in a way that makes it harder for people to become eligible for Medicaid and insurance subsidies.

That bill, which the administration also supports, is coming to the House floor this week.

The Senate last week defeated a similar measure. That bill contained an added provision reducing discretionary spending, which Senate Democrats viewed as a poison pill.

Senate Republicans said the upper chamber should take up the Hous bill next week in light of the White House announcement.

“Sen. McConnell is encouraged to see that the President will now support this provision of his own bill. While we tried to pass it last week with a different bipartisan offset, Democrats blocked it. Now, with the President’s support, the Senate should take it up next week, without adding poison pills, and send it to the President for his signature,” said Don Stewart, a spokesman for Minority Leader Mitch McConnell (R-Ky.)

—Updated at 5:45 p.m.