U.S. Senate Rejects Competing Small Business Tax Plans
Senators voted 73-24 today to reject a Republican plan to give businesses a 20 percent tax cut. They also voted 53-44 for a Democratic plan to offer tax breaks for hiring and capital investment. To overcome procedural hurdles, the Democratic plan needed 60 votes to advance.
“We are talking about a tax cut for small businesses here,” Schumer said. “That’s mother’s milk to Republicans.”
The votes previewed the debate over income tax cuts scheduled to expire at the end of the year. Senators plan to vote in the next few weeks on competing income-tax plans, and Republicans said today’s debate ignored the uncertainty caused by the threat of higher taxes in 2013.
“If we are serious about providing true tax relief that will help small businesses grow, we can sit here and debate whether a Band-Aid will be the cure to our ailing economy,” said Senator Orrin Hatch of Utah, the top Republican on the Senate Finance Committee. “Or we can begin the debate over how to prevent historic tax increases from hammering our small businesses and farms.”
The $46 billion Republican proposal, passed 235-179 by the House on April 19, would cut tax rates to companies with fewer than 500 employees.
According to the U.S. Small Business Administration’s website, companies with fewer than 500 workers represent 99.7 percent of all businesses that have employees, and they employ half of all private-sector workers.
The Democratic proposal, at a cost of $28.5 billion, would provide a 10 percent tax credit to companies that hire employees or expand their payrolls. The credit would be capped at $500,000.
The Democrats’ plan also would reinstate companies’ ability to write off 100 percent of capital investments. That break expired at the end of 2011 and businesses this year can receive only a 50 percent bonus depreciation.
“Small businesses can put people back to work across the state of Connecticut and across the country,” said Senator Richard Blumenthal, a Connecticut Democrat.
“Unfortunately Republicans continue to play politics rather than supporting concrete proposals to create jobs and strengthen the economy,” White House spokesman Jay Carney said in a statement.
On the broader tax issue, Republicans want to extend expiring tax cuts for all income levels for a year and then overhaul the tax code. Democrats, including President Barack Obama, want to extend the tax cuts only for the first $200,000 of income for individuals and $250,000 for married couples. That represents 98 percent of taxpayers.
House Majority Leader Eric Cantor, a Virginia Republican, said today his chamber will take up its legislation during the week of July 29.
The Republican proposal is H.R. 9. The Democratic proposal is S. 2237.
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