The GOP, led by Eric Cantor, recently introduced a new bill called the Small Business Tax Cut Act (H.R. 9). It should come as no surprise that this bill is rife with issues.
For example, for a business to qualify for this tax cut they have to have less than 500 employees. This disqualifies 0.1% of the companies in the US, meaning 99.9% of companies in the US are "Small Business" - mom and pop shops by this definition. Also the companies that most Americans think of as small businesses would not receive enough of a tax break to support the hiring of a new employee or even purchase new equipment. The reality is this bill creates yet another tax loophole for the rich to lower their tax rate.
Of course those are only the tip of the iceberg on this poorly designed and inappropriately named bill.
As we have all seen recently government agencies, like the GSA, can waste tax payer money. $44 for breakfast is something we should all be irritated by but politicians, seeing things through their partisan prism, only complain about the money wasted by the other party. With this in mind it should be noted that this GOP bill adds around $46 billion to the deficit while, according to Eric Cantor, only creating 40,000 jobs. The quick math puts the cost per job at around a million dollars. Even the sunniest projects show a cost of nearly a half million dollars per job. My guess is if similar results were offered for a Democratic bill this would become just another example of "big spending government", but when offered by Republicans it supposedly shows their commitment to creating jobs even though Republicans think government can't create jobs and hate it when the Democrats use government money to pick winners and losers.
The reason this will cost so much money yet create so few jobs is that this was never really intended to be a "jobs" bill. It is a tax cut for the rich disguised as a jobs bill. If the GOP truly cared about creating jobs with this bill they would have tied the tax cut to some form of job creation. No such requirement exists.
What is particularly perplexing about the lack of a job creating requirement is that similar requirements are paramount to Republicans when it comes to the poor. The complaints about welfare are that the government just gives away money without requiring that these people to find a job. Well this bill is essentially welfare for business owners. They get to reduce their taxes without creating a single job or purchasing a single piece of equipment. As a matter of fact they could reduce staff and still get the tax cut. If demanding work for pay should be a requirement for the poor to receive welfare then demanding jobs for tax cuts should be a requirement of corporate welfare.
The irony is that this bill is really just more stimulus. The president’s previous attempts to stimulate the economy have been an all of the above approach which not only included some spending but also a considerable amount of tax cuts.
While I would prefer to lean on the infrastructure spending type stimulus, given that it benefits main street more than wall street, the president’s plan has proved affective when compared to the Republican plan of mainly austerity measures similar to those enacted by the UK. So while this bill might be chock full of easy money for the rich it should be more effective at stimulating the economy than any of the other Republicans plans.
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