When Republicans talk about tax cuts for small business, does it make you feel all warm and fuzzy inside? Get Real People!
When Eric Cantor looks into the Fox News cameras and declares (uncontested of course),
“…what this bill does, the Small Business Tax Cut Act that will come to the House floor tomorrow, it provides every small business with 499 employees or less the ability to have a 20 percent tax cut straight up, money to the bottom line. So that small-business men and women can have more money to put back into their business, to grow the business, and create jobs.”
he’s not talking about quaint little “Mom & Pop” places:
According to CBPP:
- Some 49 percent of the tax cut would go to the 0.3 percent of people with incomes exceeding $1 million in 2012; they each would receive an average tax cut of more than $44,000.
- The wealthiest four percent of taxpayers — those with incomes above $200,000 — would receive 84 percent of the tax cut.
- Only 16 percent of the tax cut would go to the 96 percent of Americans making less than $200,000.
The problem is, while 49% of the “small business” tax breaks go to those with income over $1 million, only 2.5% of their income actually comes from small business.
This is due in part to the use of “Pass-throughs”, which I’ve talked about before; companies that pass the tax liability to owners.
Some “small business examples that would benefit from Cantor’s tax break:
- Oprah Winfrey’s Harpo Productions
- Paris Hilton Entertainment, Inc. (I’m biting my tongue)
- Trump Tower Sales and Leasing
- Tiger Woods Design, Inc.
- The New York Giants (and numerous other sports teams)
- BAIN CAPITAL !!!
According to the LA Times:
“The tax cut championed by House Majority Leader Eric Cantor (R-Va.) is a $46-billion giveaway to the wealthy in small-business sheep’s clothing. Even the business-oriented Tax Foundation think tank believes it’s a bad idea — “easily gamed” and poorly targeted.
Unlike the plan…drafted by Senate Democrats that would tie a tax cut to actual hiring, the Cantor measure covers any entity claiming business income, regardless of its hiring plans. (my emphasis)
…awarding them this particular tax cut would do nothing to spur the economy. Indeed, it may have the opposite effect, by increasing the deficit and making it harder to deliver tax benefits to the people who really need it — and who would spend the money in the consumer economy, namely the middle and working classes.”
“…estimated that the deduction would generate just 0 to 20 cents in economic growth for every dollar in budgetary cost…firms would receive this tax break whether they hired new workers or not; thus, CBO estimated that in 2012 it would create one job or fewer per $1 million of budgetary cost.
According to Think Progress, Gary Robbins of Fiscal Associates
“…predicts that Cantor’s tax cut — a one-year, 20 percent deduction for businesses that qualify — would add $42.6 billion to the federal budget deficit…[and] estimates that such a one-year tax cut would create 39,000 jobs. So according to the analysis that Cantor is touting on his own website, H.R. 9 would increase the federal deficit by $1.1 million for every job created.” (my emphasis)