The Small Business Tax Break That Favors the Rich - Bruce Bartlett (formerly a Reagan Advisor)
On April 19 the House passed a "Small Business Tax Cut" bill submitted by the GOP and passed mainly with Republican votes (10 Democrats voted for it, 163 voted against it.). The bill has been sent to the Senate where it is in committee.
Bruce Bartlett in the article referenced below points out that the bill doesn't really do much for small businesses (those that actually employ people) and is mostly of benefit to wealthy people.
The Republicans, of course, are saying this is about job creation but actually it does very little for job creation or to help strengthen the economy. Since it does little to strengthen the economy it's actually hurting the economy.
More of the GOP's stock-in-trade: Bullshit.
(all emphases my own)
http://www.thefiscaltimes.com/Columns/2012/03/30/The-Small-Business-Tax-Break-That-Favors-the-Rich.aspx#page1
No economic rationale was provided for this legislation. I could find no analyses supporting it, even among Republican-oriented think tanks such as the Heritage Foundation. It appears to be designed primarily to give Republicans a talking point to use on the campaign trail. They will assert that because small businesses create most of the jobs in America, any measure that reduces their taxes will per se increase jobs.
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According to a Treasury study, the bulk of small businesses don’t have any employees at all. Of 19 million such businesses in 2007, fewer than 5 million had employees. Many are what are called pass-through entities that exist largely on paper as tax avoidance devices for the wealthy.
Consequently, the vast bulk of the tax savings under the Republican plan would actually accrue to millionaires. According to the Tax Policy Center, just 5.6 percent of the benefits would be realized by those with gross incomes below $100,000, with 49 percent going to those with incomes above $1 million. The Joint Committee on Taxation estimates the gross revenue loss at $46 billion over the next two years.
Not surprisingly, the Congressional Budget Office has found that simply cutting taxes on business income is a very poor method of creating jobs.[font color="red"] It would be lucky to create 3 jobs for each $1 million of budgetary cost.[/font][/font]
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