Virginia Congressman and House Majority Leader Eric Cantor is leading the push for a 20% tax cut for small businesses. The House just passed the Small Business Tax Cut Act last week, now it goes to the Senate. Supporters hope it will enable companies to create jobs.
The idea is simple. All businesses with fewer than 500 employees would be able to cut their federal taxes by 20%. Congressman Cantor persuaded the House to pass the measure, saying it will leave small businesses with more of their income, so that they can hire more workers.
In a statement posted on Cantor's Youtube page, he stated, "In fact, there is a study out which shows that this bill when fully implemented will create an additional 100,000 plus new jobs each year," referencing a study by Fiscal Associates, Inc.
We talked with local business operators, who have mixed views. Some, such as Puritan Cleaners President Gary Glove, are all for it, saying it could help them create jobs. Others says businesses may end up using the money in other ways.
"I think it would help others," said Pleasants Hardware President James Hatcher. "I don't think it would help us a whole lot. I think we would take any kind of tax break we got and invest it back in our business within infrastructure or just hold it in cash."
One problem, says Hatcher, is that the proposed tax cut would only be for one year. "We'd like to hire someone for long term employment, so a long term incentive would be valuable to us," he told us.
Critics say the bill will also be a tax break for the wealthy, such as Donald Trump or Oprah Winfrey, who own companies with fewer than 500 employees.
But Cantor contends that it's the middle class that will benefit. "The beneficiaries of this policy are small businesses and a third of those small businesses are women-owned businesses. If we are going to get people back to work, we have got to help the job engine that produces those jobs, which is small businesses," Cantor said.
The Small Business Tax Cut Act passed the House last week, but is expected to face opposition in the Senate and from President Obama. Senate Democrats introduced a counterproposal, giving companies a 10% tax cut only if they hire new workers or increase wages.