Pigeon Drop Budgeting.

The article comments on corporate taxation in the United States as of July 3, 2006. Buffalo Supply earns something shy of 4% pretax on the $46 million a year in hospital supplies it sells, mostly to the Departments of Veterans Affairs and Defense. But beginning in 2011 the government will withhold 3% of its payments to Buffalo, as an advance against income taxes that Buffalo's owner might owe on the company's profits. Buffalo isn't a tax delinquent deserving special heavy-handed treatment. The 3% withholding will apply to all for-profit suppliers to federal, state and larger local governments. A Republican-controlled House-Senate conference committee stuck the withholding tax provision into the bill passed in May to extend lower tax rates on capital gains and dividends. Congress is adopting a series of "revenue raisers" like Buffalo's that it can package as "loophole" closers or enforcement measures. It's a nod to the budget deficit and is also intended to help pay for the extension of existing tax goodies.