Administration backs withholding repeal, veterans measure

House Republicans have for weeks pushed for ending of the 3 percent withholding rule, and President Obama had proposed delaying it in his $447 billion jobs package.

{mosads}Under the veterans measure, businesses would receive tax breaks for hiring service members, with higher credits going to companies that hired long-term unemployed and disabled veterans.

The bill also contains new vocational rehabilitation initiatives for veterans.

The House, which passed its own veterans’ jobs bill last month, will have to vote on the combined bill before it can be sent to Obama.

Sen. Patty Murray (D-Wash.), the chairwoman of the Senate Veterans’ Affairs Committee, told reporters on Thursday that she had been assured that the House would take up the measure.

The 3 percent withholding provision was enacted in 2006 to help combat tax evasion among federal contractors. The rule, which is widely opposed by business groups, was scheduled to go into effect in 2013 after being delayed a couple of times.

The administration had endorsed repealing the 3 percent provision, which will cost the Treasury around $11 billion in revenue over a decade, when it came up for House consideration. The White House has also backed a measure that would make it more difficult to obtain Medicaid, the preferred Republican offset for the 3 percent repeal.

Top Democrats like Senate Majority Leader Harry Reid (Nev.) have expressed concern that repealing the withholding provision will give a free ride to contractors who are cheating on their taxes.

Reid has called for adding protections against tax evaders to the repeal measure, and the White House as well said Thursday that it wants to remain vigilant in that area.

“The administration also believes it is important to ensure that federal contractors are compliant with tax laws and supports more targeted efforts that prevent persons with outstanding tax debts from receiving federal contracts,” the administration’s policy statement said.