Long political fights ahead over dueling tax plans

April 16, 2012 RSS Feed Print

"We want small-business people to have more money go to their pockets, not the government's," Cantor said recently at a Virginia high school. "And then they have more money to make decisions about hiring, about retaining jobs and about creating more jobs."

Democratic political consultant Alan Secrest said both measures might excite the most fervent partisans but do little for independents, who he said care more about jobs.

"And neither party has a particular advantage on that right now," Secrest said.

The Buffett rule is clearly popular. An Associated Press-GfK poll in February showed that nearly 2 in 3 favor a 30 percent tax for those making $1 million annually, including most Democrats and independents and even 4 in 10 Republicans.

Yet the measure would raise just $47 billion over a decade, a smidgen of the $7 trillion in federal deficits expected during that time.

While a 20 percent tax deduction would be welcomed by any company, the $46 billion in lower taxes Cantor's bill would provide over the next six years would barely register on the $100 trillion in U.S. economic activity projected for that period. There also are doubts that it would spur new jobs.

"If they have more sales, they'll hire," said Maury Harris, chief U.S. economist for UBS, the investment bank. "If they don't have the sales, they won't hire. That's what it's all about."

Senate Democrats, who champion a narrower bill providing tax credits for firms hiring workers, call the GOP small-business cuts "a profit-padding tax giveaway." Democrats have also criticized extending Bush's tax cuts for being too costly at a time of big budget deficits, though most favor extending them for all but the highest earners.

Rep. Dave Camp, chairman of the House Ways and Means Committee, said the business tax cut bill would show that Republicans are trying to spark job growth. He also said he would welcome Democratic opposition to any votes this year, should they occur, on renewing Bush's tax cuts.

"If the Democrats want to have all those taxes go up, let them," said Camp, R-Mich.