Today, the House of Representatives voted on H.R. 9, the Small Business Tax Cut Act sponsored by Majority Leader Eric Cantor. H.R. 9 would give businesses with less than 500 employees a deduction equal to 20 percent of their profits. The bill is projected to cost nearly $46 billion, according to the nonpartisan Joint Committee on Taxation (JCT)
Congressman Olver, who voted against the measure, said, "it appears that even companies who fire U.S. workers and send their jobs overseas would be able to reap the benefits of this deduction. Is that a sensible approach to job creation?"
Because the bill awards deductions to any business that employs fewer than 500 people and because these deductions are tied to that business's income, the "small" businesses that will receive the largest tax breaks are those which are already doing well. Firms like Bain Capital and wealthy individuals like Donald Trump, along with other already highly profitable companies will take home the biggest share of this unearned windfall.
H.R. 9 would add nearly $46 billion to the deficit without attaching even minimal job creation requirements to the deduction. "In a time of across-the-board spending cuts and limited funding for key government programs, H.R. 9 is an inexplicable and indefensible giveaway. This bill takes money which could be spent to promote hiring, provide job training or fund desperately needed infrastructure projects and instead arbitrarily distributes it to companies who may not need or deserve such a generous handout," said Congressman Olver.
There are also concerns that the structure of this deduction would actually encourage companies to delay investment and hire fewer new employees, especially if doing so would put them over the "small business" cutoff of 499.
H.R. 9 does nothing to incentivize job creation or investment by small businesses and disproportionately benefits the wealthy. 49% of those who stand to benefit from this giveaway already have annual incomes of over one million dollars. "The American people want a tax system that is fair, and a Congress which invests in rebuilding the foundations of a solid economy. H.R 9 offers neither," noted the congressman.