Lankford Supports Legislation Benefitting Taxpayers, Cities and Businesses

Statement

Congressman James Lankford (R-OK) 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 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 Congressman 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.

"This is not only bad economics for business, it is harmful for taxpayers," continued Congressman Lankford. "This would cost Oklahoma City up to $250,000, just to implement the financial system to comply with the rule, and then another $15,000 a year to maintain the system. In addition, two full time employees would need to be hired to ensure the requirements are met properly. Edmond could see expenditures rise by $4 million to cover the cost of the withholding fee.

"That means fewer contractors bidding on city and local projects--ultimately decreasing competition and increasing the costs for taxpayers. We should be focused on job creation, but the hiring of compliance officers and implementing a federal compliance system is not the answer. We need the kind of jobs that produce products and services and incentivize innovation in local communities -- not filling out an endless onslaught of paperwork.

"Passage of this bill shows that Republicans and Democrats can find common ground. The House has worked all year to put this type of common sense measure on the table, and I hope the Senate will continue to work with us in advancing more legislation that will encourage job creation to grow the economy and reduce burdensome government regulations," concluded Congressman Lankford.

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