Look out deficit hawks (if there are any left in Washington)! Congressional Republicans will be rolling out another tax cut to make the cuts passed last December permanent.
The Joint Committee on Taxation estimates that this would add over $600 BILLION to the national debt in the next decade.
This would be on top of the $1.9 TRILLION added to the national debt from the tax cuts passed 9 months ago.
Should this new GOP tax cut be enacted, the national debt would skyrocket by $2.5 TRILLION in only 10 years.
The purpose of this new tax cut proposal supposedly is to make permanent the individual and small business tax cuts that were only temporary in the December tax law.
You would think this would make small business owners happy.
But the reality is that the tax reform passed in December gave most of the financial benefits to corporations and the wealthy. While many small businesses (sole proprietors, LLCs and S-Corps) got a deduction in taxable income, the IRS has yet to clarify who qualifies for the deduction and for how much.
Whatever the income deduction ends up to be for small businesses, it won’t compare to the 40% tax rate cut corporations got. And then there is the HUGE increase in the national debt.
Locking in a bad deal for small businesses and the country’s economy is not a good deal.
Fortunately, the Senate is unlikely even to hold a vote on the House bill. The GOP leadership in the House knows this. So why the push for this Tax Reform 2.0?
The answer is simple—midterm elections politics.
Vulnerable House Republicans running for re-election need protection from valid accusations of favoritism to corporations and the wealthy when they voted for the December tax cut.
They don’t seam to care about obscenely increasing the national debt as long as a vote can be bought.
Small businesses know when they are being played as suckers.
Below is the statement Businesses for Responsible Tax Reform put out the other day. Look for more possibly next week.
GOP Plan to Vote on ‘Tax Reform 2.0’ a Political Ploy That Would Lock in Inequities of Original Tax Law for Small Business
Statement by Frank Knapp, Jr. co-chair of Businesses for Responsible Tax Reform and founder and CEO of the South Carolina Small Business Chamber of Commerce, on House Republicans’ “Tax Reform 2.0” plan, which lawmakers say they’ll vote on this month
Washington, D.C., Sept. 6, 2018—House Republicans’ roll-out today of details on a second round of tax cuts is a naked attempt to boost lagging political support for Republicans before the midterm elections, and won’t help small businesses overcome the inequities created by the original tax law.
The tax law did little for the majority of Main Street small businesses, and instead added $1.9 trillion to the national debt in order to give corporations a 40 percent tax cut they didn’t need—which they’re now using to buy back stocks in record amounts instead of creating jobs, raising worker pay or fostering innovation.
Version 2.0 will likely make the tax law’s small business provisions permanent, locking in the disparities the GOP created in giving away the farm to the wealthiest businesses and leaving the majority of Main Street in the cold. Making the ineffective small business deduction permanent and blowing up the deficit isn’t what America’s job creators need.
The Joint Committee on Taxation found that in 2018, 44 percent of the tax benefits for small businesses from the original law will go to just 200,000 Americans making $1 million or more. By 2024, millionaires will be receiving half of that tax relief. This means 1 percent of small businesses are receiving the lion’s share of the benefit.
Let’s not pretend this latest discussion is about jobs and the economy. It’s about politics ahead of the November elections. The national unpopularity of Republican Congressional candidates is a self-inflicted wound brought on when the GOP let corporations and the wealthy feast during the original round of tax cuts rather than creating a thoughtful plan that helped the middle class and our nation’s true job creators—small business. Taking votes on more tax cuts ahead of the election is pure politics, plain and simple, and isn’t what small businesses need from them.
Instead of doubling down on bad policy, lawmakers need to create a plan that gives Main Street small businesses an equal seat at the table and helps small business owners invest in their business and take care of their employees.
About Businesses for Responsible Tax Reform
Businesses for Responsible Tax Reform is a coalition of business leaders calling for tax reform that truly benefits America’s small business owners. We are dedicated to ensuring tax reform is fiscally responsible, creates a level playing field for all businesses, grows the economy and works for our nation’s 30 million small business owners. Learn more about us on our website and follow us on Twitter and Facebook.