Chuck Grassley, the senior Republican on the Senate Committee on Finance, has called on the White House and Democratic congressional leaders to boost the economy by lowering small businesses’ tax burden.
Grassley argued that the President’s jobs summit on December 3 should consider small business tax relief, and the Democratic leaders in Congress should follow suit.
While the summit is expected to include a discussion on small business incentives, Grassley thinks that the current administration has ignored the plight of the nation's small businesses since coming to office. Indeed, he believes that the small business sector is being unfairly targeted by the White House and leading Democrats as a source for new tax revenues, through measures such as the proposed health care surtax.
According to Grassley, an analysis by the Republican tax staff of the Finance Committee found that less than one-half of 1% of the tax relief in the Recovery Act went to small business.
Moreover, the Joint Committee on Taxation and Republican Finance Committee tax staff suggest that one-third of the USD460.5bn raised by the surtax in the House of Representatives’ health care bill comes from flow-through business income.
“The marginal tax rate on that kind of small business income will rise by 69%,” Grassley stated. “Small businesses create 70 percent of new jobs. If the surtax is enacted, job creation will go down.”
Grassley introduced legislation in June that includes a series of measures to help small businesses, which, he argues, create 70% of all net new jobs.
Among other proposals, Grassley's bill would increase the amount of capital expenditure that small businesses could expense from USD250,000 to USD500,000, extend the carryback period for general business credits to 5 years from 1 year for small businesses, and reduce the tax burden for C Corporations and S Corporations.
“My bill will leave more money in the hands of small business owners so they can hire more workers, keep paying the salaries of their employees, and make additional investments that will lead to new jobs,” Grassley stated.
He concluded: “Unfortunately, the White House and congressional Democrats seem to see small business owners as a cash cow for other priorities and want to raise their taxes. If we don’t help the one segment of the economy that creates the majority of new jobs, we’ll be in even worse economic shape than we are now.”
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