On a mostly party-line vote, House Republicans Thursday afternoon passed a $46 billion temporary small business tax cut measure; however, the bill has virtually no chance of survival in the Senate, let alone ever garnering the president’s signature.
The House approved the Small Business Tax Cut Act 235-173, which would allow businesses with fewer than 500 employees to deduct up to 20 percent of their profits this year. Republicans say the measure would help kickstart the nation’s thus-far sluggish economic recovery.
“Our bill puts more money into the hands of small business owners so they can reinvest those funds to retain and create more jobs and grow their businesses – plain and simple,” House Majority Leader Eric Cantor said during his remarks on the floor.
But on the other side of the aisle, Democrats have argued the bill would benefit some of the country’s wealthiest business owners just as much as it would small firms. They have pitched a substitute bill that would instead offer a deduction on capital investments made by small companies, rather than a deduction on their earnings.
Neither proposal stands much of a chance of passing through both the Democrat-controlled Senate and the Republican-controlled House. President Obama has also already threatened to veto the GOP measure should it somehow make it to the White House.
The bill “is not focused on cutting taxes for small businesses, but instead would provide tax cuts to the most fortunate,” the Executive Office of the President’s Office of Management and Budget said in a statement. “Under the bill’s definition of income, many of the ‘small businesses’ that would receive the largest tax breaks are law partners, consultants, and other wealthy individuals and corporations with the biggest profits.”
Coming one day after the tax deadline, Thursday’s vote draws an increasingly clear and critical distinction between the two parties’ plans for tax reform during this election year. Thursday’s vote essentially foils the Senate’s failed attempt to pass a so-called “Buffett Rule” measure earlier this week, which would have raised taxes on individuals making more than a million dollars a year.