October 6, 2011

The Honorable Dave Camp, Chairman
U.S. House Ways and Means Committee
U.S. House of Representatives    
Washington, D.C. 20515

The Honorable Sander Levin, Ranking Member           
U.S. House Ways and Means Committee
U.S. House of Representatives
Washington, D.C. 20515

RE: H.R. 674 – Repeal of 3% Withholding

Dear Chairman Camp and Ranking Member Levin:

The National Conference of State Legislatures urges your expeditious action on and support for H.R. 674, legislation that would repeal Section 511 of the Tax Increase Prevention and Reconciliation Act of 2005 and eliminate a costly unfunded federal mandate, which that section of law imposes on state and local governments.

State legislators have closed budget gaps exceeding one-half trillion dollars over the past four years. There are some signs that future state budget gaps may be reduced due to spending cuts already imposed, revenue upturns in some states and improving economic conditions once again in certain jurisdictions. But, considerable future fiscal challenges, particularly regarding Medicaid and public education, make the mandated costs imposed by Section 511 intolerable and unacceptable in a world where budgets must be balanced.

Furthermore, the capacity of governments to carry out Section 511’s withholding and remittance mandates is uneven. Some do not have the resources, capacity or personnel to meet required activities. Others will have to modify or, in some instances, replace operative payment and procurement systems. Also, the three percent withholding requirement threatens increases in the purchase of various goods and services as vendors attempt to pass along an additional cost of doing business.

Thank you for your consideration of NCSL’s perspective on this legislation. For additional information, please have your staff contact Michael Bird (202-624-8686, michael.bird@ncsl.org) or Jeff Hurley (202-624-7753, jeff.hurley@ncsl.org).

 

Respectfully,
 

Representative Jay Kaufman
Massachusetts House of Representatives
Chair, NCSL Budgets and Revenue Committee