Conservatives Criticize GOP’s $1 Million-Per-Job Business Tax Cut Bill

April 19, 2012 1:27 p.m.

Billed as an effort to aid small businesses, House Republicans passed a broad business tax cut Thursday afternoon, overcoming fire from both the left and right about its meager job-creation potential.

Majority Leader Eric Cantor spearheaded the measure, which passed 235-173, and would allow businesses with fewer than 500 employees to deduct 20 percent of their income, at a revenue cost of $46 billion next year alone. Senate Democrats have rejected it and the White House has threatened a veto.

That’s not simply to deny Cantor and the GOP an election-year victory. According to an outside analysis posted on Cantor’s website, the expensive tax cut would create some 40,000 jobs in one year. As NPR has calculated, that’s upwards of $1 million per job created.Cantor’s office pointed out that the analysis also says the bill would create more than 100,000 jobs annually in the out-years. But the tax break is written to sunset after one year, leaving open the question of how it would impact hiring after it expires.

It’s that sort of budgeting that has incited conservative criticism. The Wall Street Journal editorial board called the bill a “gimmick” and decreed the 500-employee cutoff as “arbitrary and political — a ploy to let Republicans say they aren’t cutting taxes for big business.”

Former Reagan policy adviser Bruce Bartlett, in a column that Democrats have been gleefully quoting all week, wrote: “The Republican tax plan will do nothing whatsoever to increase employment. It is nothing more than an election year give-away to a favored Republican constituency and should not be taken seriously.”

Shortly before House passage, Senate Democrats held a Capitol press briefing touting their alternative plan, and pointing out that the GOP’s version would, as the nonpartisan Tax Policy Center has calculated, disproportionately benefit the wealthy.

“Their bill is missing two words: new jobs. You get that 20 percent tax break whether you create a job or not,” said No. 3 Democratic Sen. Chuck Schumer (NY). “What kind of jobs bill is that? It’s utterly amazing how our colleagues across the hall can figure out more ways to help the very wealthy and label them jobs bills even when they don’t create a single job. They’ve been making this into an art form, almost.”

The Democrats’ alternative is more targeted. It would offer businesses a 10 percent income tax credit for new hires or increased wages, and let them write off the cost of new capital expenditures. The bill does not have an official score but Dems expect it to cost $26 billion.

But these technicalities obscure the broader messaging objective. Cantor used the moment to paint Republicans as tax-cutters and Democrats as tax-hikers.

“This week, when every American filed their tax returns, the other party in the Senate voted to increase taxes,” the No. 2 House Republican said on the floor. “We should not be taking money out of the hands of those we are counting on to create jobs. We need to let small business owners keep more of their hard-earned money so they can start hiring again.”

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