Rep. Eric Cantor’s (VA-7) Small Business Tax Cut Act would be more aptly named the “Small Business Identify Theft Act”. His bill defines a small business as one with fewer than 500 employees – and given that 95% of Washington businesses employ fewer than 50 workers, that cutoff is far too high.
For the sake of comparison, Australia defines a small business as one with fewer than 15 employees; the EU sets the cutoff at 50. And while the U.S. Small Business Administration sets the “small business” name limit at 500 for some companies, it also considers average annual revenue. For example, in most retail and service industries, firms bringing in $7 million or more each year do not count as small businesses – regardless of their number of employees.
But Cantor’s bill doesn’t even set a revenue cap, meaning Donald Trump’s Trump Tower Sales & Leasing would qualify for this bit of tax largesse, but many mom and pop shops still won’t qualify. Cantor’s cuts would be based on wages paid to non-owner employees – and last year 25 million small businesses had no employees aside from their owners – so Cantor’s bill won’t actually help many Main Street business.
At a cost of $45.9 billion, Cantor’s bill would cut taxes for a few wealthy companies under the guise of helping “small business,” and provide no help to millions of actual small businesses. The IRS adds that the new tax form required by Cantor’s bill, Form 8903-A, “would be complicated.” This isn’t just poorly written policy – it’s not a good way to help struggling Main Street businesses.
For that kind of money, the U.S. would be far better off doing things like putting people to work rebuilding crumbling infrastructure, reducing tuition for public higher education, and encouraging states to hire back teachers. Ask any struggling small business owner the Henry Ford question, “Which would you rather have, lower wages or prosperous customers?” They want prosperous customers!
~ by Pete Stewart, EOI intern