Senate Democrats' small-business tax bill would create nearly 1 million jobs, says a nonpartisan report.
Regional Economic Models Inc. (REMI), an economic modeling firm based in Amherst, Mass., says the Small Business Jobs and Tax Relief Act would add nearly a million jobs to the U.S. economy, about 630,000 of which would be created among small business.
Windfall for Small Businesses
The bill would grant small businesses a 10 percent tax cut up to a maximum of $500,000 in exchange for hiring new workers or raising employee pay. It will allow businesses to deduct 100 percent of the cost of significant investments, such as the purchase of new equipment, made in 2012. (Under the current law, the write-off of those costs is capped at 50 percent.) The proposal also offers a break on the alternative minimum tax for corporate taxpayers.
“Creating close to 1 million jobs would put a meaningful dent in the unemployment problem,” says Sen. Charles Schumer (D-NY), chairman of the Senate Democratic Policy and Communications Center.
Schumer added that, “This tax cut is not a cure-all, but it could be a difference-maker for small firms on the fence about adding payroll. After last month's sluggish jobs numbers, we may be on the verge of a rare moment of agreement on how to help the economy.”
The bill would cost about $28 billion overall. REMI estimates that the combined impact of the cuts would be $87 billion added to the GDP and 990,592 jobs, mostly in the healthcare, social assistance and retail sectors. The bill also would boost personal income by about $73 billion, according to the report.
Tossing in a Tax Cut
Separately, House Majority Leader Eric Cantor (R-Va.) has proposed a $46 billion small-business tax cut. Democrats and outside analysts have complained that the cut—a one-year, 20-percent-off deal for businesses with fewer than 500 employees that House passed in April—disproportionately helps the wealthy and doesn't include a requirement for businesses to hire. The cut would apply to law firms and sports teams, and Rep. Xavier Becerra (D-Calif.) has pointed out that even Paris Hilton would qualify, because the socialite lists five employees at her Beverly Hills company. 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.
Republican lawmakers will discuss the Senate plan today, and a vote on whether to hold a debate on it also could come as early as this evening.
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