WASHINGTON – House Republicans plan legislation granting small businesses a 20 percent tax deduction, a GOP leader said Wednesday, as the party stepped up its election-year competition with President Barack Obama over who is doing the most to create jobs.
The tax cut would apply to every business with fewer than 500 employees, House Majority Leader Eric Cantor, R-Va., said in a memo released to reporters.
The bill is to be introduced next month. An aide said no decisions have been made about its price tag, how long the tax reduction would last and other details.
A deduction is an amount taxpayers can deduct from their income before they determine how much they owe in taxes.
Cantor announced the proposal a day after Obama said lawmakers should quickly enact his own menu of tax breaks for small businesses, including some GOP-written measures that have already started moving in Congress.
Illustrating the political stakes involved, Cantor emphasized that the GOP proposal would help small businesses "retain and create new jobs" and set a symbolic goal of approving the bill by mid-April, when federal income taxes are due.
"I hope every Democrat will join us in passing the small business tax cut by April 15," he said.
The dueling proposals let each party show it is trying to help an important constituency that is also popular with voters. Any eventual bipartisan agreement would also help them demonstrate that they are capable of cooperation, at a time when polls show the voters have record low opinions of lawmakers.
With the economy still in the doldrums and looming as the top issue in November's elections, Republicans have long embraced a broad tax-cutting agenda. It includes reducing the top income tax rates paid by individuals and businesses from their current 35 percent to 25 percent.
In the 2013 budget he will unveil this month, Obama plans to include a series of small business proposals, including some that the GOP has started pushing through Congress. He wants to eliminate capital gains taxes on investments in small businesses and extend for another year the ability of all businesses to immediately deduct their costs for purchasing equipment and software.
He is also pushing a new 10 percent tax credit for small businesses that hire additional people or boost wages this year.
Republicans have long charged that Obama's efforts to rebuild the economy, including the 2009 economic stimulus, have failed. On Wednesday, Cantor noted that several Obama proposals are GOP ideas.
"We've been asking the president to join us to help small businesses, so we're very excited about that and hopefully we can get something done," he said of the president's proposal.