The planned repeal of the 3 percent withholding tax on contractors is especially important to New Mexico because of its devastated construction sector, say industry officials and the state’s congressional delegation.
The state last month bucked a national trend of improved hiring and in fact lost 1,100 jobs during the month, which at 2.7 percent was the fourth-highest percentage decline in the country, according to an analysis of federal labor statistics by the Associated General Contractors of America.
New Mexico has the most beleaguered construction sector in the country in a year-to-year comparison, AGC told the Journal. The state lost 4,100 construction jobs during the 12 months ending with September. At 9.5 percent, the loss was the highest percentage decline in the country.
U.S. Reps. Martin Heinrich, D-N.M., Ben Ray Luján, D-N.M., and Steve Pearce, R-N.M., all support repeal and are co-sponsors of HR 674. As of Wednesday, 269 members of the House were co-sponsors.
The repeal effort “has received bipartisan support for good reason,” Pearce said in a statement. “Allowing the government, at any level, to withhold an extra 3 percent out of payments to small businesses and job creators hinders job growth. Job growth is the solution to our current economic crisis …”
Repeal will “ensure that small businesses contracting with the federal government will not be burdened in the future by a provision that withholds part of their payment,” Luján told the Journal.
AGC officials also made their case for what would happen if there is no repeal.
Stephen Sandherr, AGC CEO, said failure to approve repeal would be “devastating.”
A recent survey of contractors showed two-thirds would have to increase their bids for government contracts in order to cover the 3 percent withholding. One out of every 10 said they would submit bids for fewer government contracts.
“Fewer bidders and higher bid levels will mean taxpayers will be forced to pay higher for public works projects,” Sandherr said.