W ith a bill as inappropriate as a whoopee cushion in a funeral home waiting room, House Republicans sought this week to set up President Obama and congressional Democrats as being anti-small business.
House Majority Leader Eric Cantor, R-Va., authored this election year stunt of a bill, which predictably passed yesterday, 235-73, thanks to the Pavlovian response of House Republicans when their masters speak.
Cantor’s bill would balloon the deficit $46 billion to give “small” businesses – 500 or fewer employees – a one-year 20 percent tax cut. However, in typical Republican fashion, Cantor tailored his measure so that much of the benefits would flow to very wealthy business people, not the couple running a dry cleaning shop, the guy with a two-chair barber shop or the woman who grooms pets for a living.
Cantor claims his handiwork will free up capital so businesses can expand and thus do more hiring.
No one with a clue about business and economics will be fooled by that nonsense. Businesses don’t hire for the sheer joy of handing out more paychecks. They bring in more people because they’re doing more business than the employees they have can handle efficiently. Nor does giving businesses a big tax break cause them to buy more materials and services from suppliers. They buy more when they need more to keep up with demand.
The inescapable fact is that Increased demand, not money in hand, is what spurs employers to hire more people. Those who say otherwise are ignorant of the facts or pursuing political ends in spite of the facts.
Which brings us back to Cantor. This bill of his is the latest in a long list of time-wasting nonsense legislation House Republicans have passed this year knowing full well the bills would die in the Senate or be vetoed by the president. The idea this time is to create something campaigning Republicans can hold up to mom-and-pop business owners, telling them that they could’ve had so much more money to work with if anti-business Democrats hadn’t stood in the way.
You can get an idea of what a load of garbage that is from what some number crunchers have to say about Cantor’s measure (emphasis ours).
The bipartisan Joint Committee on Taxation said the tax cut’s impact on the economy would be “so small as to be incalculable.” Representative Eric Cantor of Virginia, the House majority leader, commissioned Gary Robbins, who created Herman Cain’s 9-9-9 tax plan, to analyze the business tax cut, which Mr. Cantor drafted. The conclusion was that in the year it would exist, it would create 39,000 jobs, at a cost in tax revenue of $1.2 million per job.
Much of the debate was on Democratic grounds: Who benefits? The nonpartisan Tax Policy Center estimated that 49 percent of the $46 billion in tax breaks would go to households earning more than $1 million.
Earlier in the week, Senate Republicans blocked Democrats’ attempt to legislate the Buffett Rule, which holds that multimillionaire CEO’s shouldn’t be subject to lower tax rates than their secretaries. The Democrats’ bill would’ve set a 30 percent minimum tax on households with $1 million or more in annual income. If passed, that measure would’ve yielded an additional $47 billion in sorely needed federal revenues.
Democrats are also pushing a bill that would provide businesses that hire additional workers a 10 percent tax credit and allow immediate deduction of new plant and equipment costs. It’s expected to come up for a vote next month.