Small Business Tax Cut Would Help Stars, Hedge Funds

WASHINGTON -- House Majority Leader Eric Cantor on Wednesday unveiled a $46 billion economic stimulus bill that would cut taxes for small businesses -- and offer a windfall for wealthy celebrities and hedge funds.

The Small Business Tax Cut Act would grant a one-year 20 percent cut on taxes paid by small businesses, defined by the federal government as companies that employ fewer than 500 people.

"We need to help our small businesses. That's what this does," said Cantor (R-Va.) at a Capitol Hill news conference. "We hope it will go forward in a bipartisan manner, just like the JOBS Act went through the House, because I don't think any of us can disagree that right now especially is the best time to help small-business men and women."

Cantor's bill removes a restriction that, in previous versions of the legislation, would have barred certain highly compensated professions -- such as finance, law and health -- from receiving the tax cut. The change allows people such as hedge fund managers, corporate lawyers, surgeons and celebrities to qualify for the break. Donald Trump and Oprah could qualify, for instance.

"In the first version, they were kept out, but in this one, they're in," said Chuck Marr, a director at the left-leaning Center on Budget and Policy Priorities. "This is really just a tax cut for the richest people in the country."

In fact, of the 400 richest taxpayers in the United States, 202 would qualify for the break, according to 2008 statistics from the Internal Revenue Service. Those 202 taxpayers had average business income of $106.7 million.

But Cantor defended the move.

"As far as excluding businesses, which one may or may not approve of their legal activities, we don't make those distinctions when we're talking about corporate rates or individual rates," Cantor said.

He argued that businesses with few employees would not be able to take too much advantage because the tax break is capped at 50 percent of what the company pays to its workers or to its minor owners and family members who work for the business, whichever is greater.

"So there's not going to be a potential for that kind of abuse," Cantor said. "We're really about trying to help the small business owners who are out there working every day, and it just seems the government has got in the way. And we're just trying to provide them with some relief."

Cantor also defended proposing a $46 billion bill that would not be paid for.

"We in our budget provide for trillions of dollars in mandatory savings that help resolve the budget deficit and increasing debt in this country," he said. "We don't feel it's appropriate to burden small businesses, and that's why we are going forward with this bill."

CORRECTION: An earlier version of this story understated the income figures for the richest Americans.

Michael McAuliff covers politics and Congress for The Huffington Post. Talk to him on Facebook.

Comments

[Soundofthunder]

06:19 PM on 04/18/2012

So if you employ 499 athletes who each make around $10 million, you are a "small business". Yes, and every building under 1,000 feet tall is a "cottage."

S

[Ben Roth]

11:11 AM on 04/18/2012

Do your homework America, Eric Cantor and family are up to their eyeballs in hedge funds.

[John Moormans]

06:03 AM on 03/26/2012

Seriously, that's definitely sad! You really need to do the legwork and examine these tax debt relief businesses before getting one. I happened upon ConsumerTaxReports.org, and they really sets it out for you: company Internet websites, Better Business Bureau rankings, ordinary charges ... In case you are obligated to repay the IRS, you must examine their website (http://www.consumertaxreports.org). I do think it'll positively assist you!

[l78lancer]

10:38 PM on 03/23/2012

That's just what America needs - more tax breaks for rich folks who didn't ask for it, and won't benefit the rest of the country.

[l78lancer]

10:31 PM on 03/23/2012

Cantor doesn't get it. Giving away tax money didn't work when Bush did it, either. But what's $46 billion amongst friends?

[CA93010]

08:33 PM on 04/14/2012

Party Consistency?

[Scott EngageAmerica]

04:50 PM on 03/22/2012

I agree that we need to reduce barriers for small business, but this will be yet another temporary tax cut that will stay a loophole for years to come.

Plus, the unfunded bill' a hefty price tag is troubling when just recently the CBO reported that that if laws remain unchanged the federal budget deficit for this year will be $1.1 trillion (http://1.usa.gov/xju6K9). That number is in addition to total debt over $15 Trillion and projections that by 2021 federal debt will be over $20 trillion (http://1.usa.gov/wt4DPi).

[homwwilk]

03:36 PM on 03/22/2012

It is hard for me to understand how these people get elected. Do the voters not perceive him to be a joke? America is going to hell in a hand basket with people like this and up here in Canada we have politicians that are determined to follow close behind.

[Scrnwrtr82]

12:34 PM on 03/22/2012

So the "haves" have more and the "have nots" have even less. Sounds like a great way to build up a county....not.

[bob haschat]

12:28 PM on 03/22/2012

This really is silly...here is what they want...in laymans terms....the breadwinner(gubmint) of the family keeps asking for a cut in pay(tax cut). The family is growing (America, and it's population) more kids and a dof too. As we keep asking for paycut after paycut from out employees, we are down grading from the minivan to a coupe, because we can't afford the payments on the minivan...we ask for another paycut....soon it's time to sell the house and move I to a smaller apartment, and limit the amount of food that is bought for the family(austerity). Why would the breadwinner in a family ever put his or her family into this situation? Who askes for paycut after paycut? Republicans....our country and it's population is getting bigger, thus the cost of it will get bigger, so why cut taxes? They have been steadily cut over the last 5 decades..,you can only cut so much..

[Devin DeWeil]

12:01 PM on 03/22/2012

Cantor and his grand plan to eliminate taxes on the wealthy. What's new?? Has anyone read his budget?? It's a joke.

$3 TRILLION in tax giveaways to the wealthy and corporations, elimination of medicare to be replace by declining value vouchers, a 13% DECREASE in VA funding with Iraq veterans just coming home, and effectively allowing any insurance company to set their own rates WITHOUT ANY REGULATION OF COST GROWTH.

This bill is just another example of how Republican have declared war on average Americans. Please VOTE DEMS IN 2012!!!

[Thomas Ruane]

12:23 PM on 03/22/2012

I'm with you Dems all the way in 2012.

[jkanon]

10:51 AM on 03/22/2012

Here we go again: Tax cuts for the rich pay for themselves.. This is a myth. There is no empirical data that shows this happens.

[dhpakr]

09:51 AM on 03/23/2012

Please look at the increase in revenue to the federal government after the Reagan tax cuts in the early 80's. Do you think that was just luck?

[albertarick]

10:32 AM on 03/26/2012

That revenue did not increase relative to the increased debt taken on by the same Reagan government. The US continue to run deficit budgets until Clintons 2nd term.

[majorwiblit]

10:38 AM on 03/22/2012

Cantor talks,,,,,Boehner gets beat up,,,,works for me!

[Byron Renty]

10:32 AM on 03/22/2012

Is there anything more slimy than Eric Cantor coming to the podium to announce anything? Surprise! Another big business giveaway sorry Virginia, but Cantor is the Grinch who stole Christmas! When will these guys do anything for anyone besides the rich?

[free reign]

10:38 AM on 03/22/2012

There are no more open forums for Cantor. He is too scared to appear in public. Only hand picked audiences. Spineless, played-out lackeys are not on the top 10 list from reps or dems.

[alice sophia]

10:30 AM on 03/22/2012

Cantor doesn't look happy. Boehner might want to get out of DC for the next few days, save himself another beating.

[Byron Renty]

10:21 AM on 03/22/2012

Surprise! Another big business, take from the poor and give to the rich giveaway! Let's take away the social safety net programs and give more tax breaks to the rich! Kind of like a reverse Robin Hood. Sorry this sad sack is your representative Wisconsin. While you're cleaning out your governor and state legislature, maybe you could send reverse Robin Hood a message too when he's up for reelection. Between the union busting legislation and Dr. Bad Budget, Wisconsin's gonna be busy in November!