|GOP ready to push business tax cut through House |
|Posted: Thursday, April 19, 2012 9:02 pm |
|By ALAN FRAM |
WASHINGTON (AP) — Republicans are using a House vote on tax cuts for nearly every employer in the country to make an election-year statement that they want to help companies create jobs. Democrats say the measure is merely the latest GOP effort to funnel federal help to those who are already successful.
The GOP-run House was ready to approve the legislation today in a vote lacking either suspense or any expectation that the plan would become law. The bill will die in the Democratic-controlled Senate, and for good measure the White House has threatened a veto by President Obama, saying the proposal is far too broad and generous to the wealthy.
“To sit here and say we can’t help the middle class because somehow there will be a benefit for those who are above the middle class doesn’t make a lot of sense to me,” House Majority Leader Eric Cantor, R-Va., the bill’s author, told reporters Wednesday. “Because if the goal is job creation, we want to have everybody back in the game.”
With the economy and jobs the unrivaled top issues in this year’s presidential and congressional campaigns, both parties are using symbolic tax votes this week to underscore how they would make things better. On Monday — a day before the Internal Revenue Service’s deadline for tax returns — Republicans stopped a Democratic measure in the Senate that would have imposed Obama’s “Buffett Rule” taxes on people earning at least $1 million a year.
The House measure would provide a one-year, 20 percent tax deduction for companies with fewer than 500 workers, whether they hire additional employees or not. That means firms could generally subtract 20 percent from their incomes before calculating the federal taxes they owe.
Companies employing owners’ relatives and workers who own small parts of the business would qualify for the reduction.
Republicans have named the bill the “Small Business Tax Cut Act,” even though more than 99 percent of the country’s employers had fewer than 500 workers in 2008, the most recent year for which Census Bureau figures are available. Cantor said he chose 500 as the cutoff because that is the definition for small business that the Small Business Administration uses.
The tax break would cost the government $46 billion in lost revenue — money that would add to deficits that are already huge. Catching Democrats’ attention was an estimate by the nonpartisan Tax Policy Center, which studies tax legislation, that 49 percent of the bill’s benefits would go to employers making more than $1 million annually.
“It’s another giveaway to big corporations and people of extreme wealth,” Rep. Jim McGovern, D-Mass., said of the bill. “It’s a gimmick to appeal to their base, and it’s not going anywhere.”
Democrats noted that Congress’ nonpartisan Joint Committee on Taxation, which analyzes tax legislation for lawmakers, wrote recently that because the bill was tiny compared with the $15 trillion in annual U.S. economic activity, its impact on stimulating the economy would be “quite small.”
Obama has proposed a narrower way of prodding companies to add workers. His budget included creation of a 10 percent tax credit — an amount subtracted from a firm’s tax liability — for companies that increase their payrolls this year. That measure has an $18 billion price tag.
Cantor’s office listed dozens of business trade groups and firms that were backing his measure, ranging from the Academy of General Dentistry to the World Golf Foundation.
“The short-term tax cut put forth in this bill is critical to franchise owners making decisions about hiring additional workers or expanding their businesses today,” Judith Thorman, a vice president of the International Franchise Association, wrote Wednesday in a letter to lawmakers.
Missing from Cantor’s tally was the National Federation of Independent Business, the country’s highest-profile small business organization.
Asked for their view, federation spokeswoman Jennifer Cooper said in a written statement that the group “appreciates the continued focus from Congress to help small business with their tax burden.”
Her statement made no direct mention of Cantor’s bill, instead singling out for praise the reductions in individual income tax rates proposed in the House-approved GOP budget.
Published in The Messenger 4.19.12