Rep. Cantor’s small-business tax cut bill passes House in 235-173 vote

The House approved legislation backed by Majority Leader Eric Cantor (R-Va.) on Thursday that would cut taxes on small business by 20 percent.

In a largely party-line vote, Republicans turned aside Democratic objections that the tax cut is a handout to the wealthiest, and that its $46 billion price tag is not offset with spending cuts or revenue.

{mosads}Ten Republicans voted against the measure, while 18 Democrats sided with the GOP majority and supported it. The final vote tally was 235-173.

Cantor, as he has throughout the week, pressed the case for the tax cut on Thursday, saying it was something lawmakers could put into place while they laid the groundwork for a comprehensive overhaul of the tax code.

“What we want to do in a permanent way is effect broader tax reform,” the Virginia Republican said. “But since we can’t see eye to eye on that, since we’ve still got work to do, let’s give the small businesses some help now.”

But Democrats in both chambers slammed the proposal on Thursday, citing data asserting that almost half of its benefits would go to those making more than $1 million per year.

The White House has threatened to veto the tax cut, which would be in effect for one year and available to companies with under 500 employees.

“This bill needs to be graded, and the grade it gets is F,” said Rep. Sandy Levin (Mich.), the ranking Democrat on the tax-writing Ways and Means Committee. “A fat F grade. It fails all tests of sound tax policy.”

The vote was the culmination of a week where Republicans and Democrats sought to go on an election-year offensive on taxes while accusing each other of offering nothing but political gimmicks.

Senate Republicans on Monday blocked Democratic legislation, modeled after the “Buffett Rule,” that would implement a minimum tax rate on millionaires.

While the two parties staked out starkly different ground on taxes, both believe they crafted an attractive message in a week in which millions of people filed their returns with the IRS.

Top Senate Democrats on Thursday talked up their competing small-business tax cut, which would tie tax relief to adding new workers or giving raises to existing employees.

Senate Majority Leader Harry Reid (D-Nev.) told reporters he hoped the measure could hit the floor of his chamber next month.

Democrats linked that proposal to their support for the payroll tax  cut and the Buffett Rule, and argued they are fighting for the middle class against Republicans who are siding with the rich.

“It is utterly amazing how our colleagues across the hall can figure out more ways to help the very wealthy and label them jobs bills even when they don’t create a single job,” said Sen. Charles Schumer (N.Y.), a key spokesman for Democratic priorities. “They’ve been making this into an art form, almost.”

But House Republicans said voters would respond to their more positive message on taxes.

“We want to grow more successful small businesses and the jobs along Main Street,” said Rep. Kevin Brady (R-Texas), a senior member of Ways and Means. “Democrats want to punish those who invest and work hard and succeed over the years.”

Still, GOP leaders had to overcome some skepticism from their rank and file on the 20 percent tax-cut proposal. Some Republicans were concerned about the measure’s impact on the deficit, and GOP lawmakers generally prefer tax policy to be long-term.

The 10 Republicans voting against the tax cut were Reps. Justin Amash (Mich.), Paul Broun (Ga.), Jeff Fortenberry (Neb.), Raul Labrador (Idaho), Steven LaTourette (Ohio), Cynthia Lummis (Wyo.), Tom McClintock (Calif.), Mick Mulvaney (S.C.), Reid Ribble (Wis.) and Rob Woodall (Ga.).

With the election still more than six months away, Democrats have vowed to bring the Buffett Rule bill up again, even though taxes are usually Republicans’ bread-and-butter issue.

Under the Buffett Rule bill, taxpayers making more than $2 million a year, including from capital gains and dividends, would be required to pay at least a 30 percent federal tax rate. The rule would be phased in for those making between $1 million and $2 million per year.

Democratic Party leaders have continually cited polls this week showing that voters support the Buffett Rule, and have argued the 13.9 percent tax rate that presumptive GOP nominee Mitt Romney paid in 2010 underscores the need for the legislation.

With Senate Democrats planning more work on the Buffett Rule, the House is expected to take more pre-election tax votes, possibly including an extension of the George W. Bush-era tax rates.

“I think we’re going to have various political votes going on for a while,” said Rep. Charles Boustany Jr. (R-La.), another senior Ways and Means member.