GOP pushes business tax cut through divided House

WASHINGTON (AP) — Republicans rammed an election-year, $46 billion tax cut for most of America's employers through the House on Thursday, ignoring a White House veto threat in a debate both parties used to show voters how they would bolster the economy.


The near party-line 235-173 vote moved the bill to the Senate, where Democrats controlling the chamber are sure to ignore it. But the measure's inevitable demise was secondary to the chance it gave each side to offer its prescriptions for creating jobs, echoing the battle that seems certain to dominate this fall's contest for the White House between President Barack Obama and Republican Mitt Romney.


"This is straight-up something to help small businesses keep more of their money while they're having so much difficulty keeping the lights on, and instead giving them the ability to grow," said House Majority Leader Eric Cantor, R-Va., the measure's sponsor.


"This is not about mom and pop," said Rep. Sander Levin, D-Mich. "It's about popping the cork for wealthy taxpayers."


Eighteen Democrats and 10 Republicans defected from their party's positions on the bill.


The vote was the second partisan tax showdown in the Capitol this week, prompted by Tuesday's deadline for filing tax returns to the Internal Revenue Service. On Monday Democrats failed to push a "Buffett Rule" tax on the rich through the Senate, another outcome that was preordained but served political purposes for both sides.


The House GOP measure would let employers with fewer than 500 workers deduct 20 percent of their domestic earnings this year — a calculation that would let businesses show a smaller income before determining the taxes they owe. More than 99 percent of U.S. employers have workforces that size, Census Bureau figures show, but that didn't stop Republicans from naming the legislation the "Small Business Tax Cut Act."


Democrats argued that the bill was too unfocused, providing the tax cut if a company hired no new employees or even if it fired some. They also complained that it was too generous to wealthy individuals owning small firms and to extremely successful businesses.


One estimate by the nonpartisan Tax Policy Center said 49 percent of its tax breaks would go to taxpayers with income exceeding $1 million. Using a narrower way of calculating earnings, the Joint Committee on Taxation, Congress' nonpartisan tax analyst, said 18 percent of the benefits would go those making over $1 million and 57 percent would go to taxpayers earning $250,000 and up.


The White House cited both those arguments when it warned this week that aides would urge Obama to veto the legislation.


Democrats tried taking advantage of the bill's broad sweep, trying to embarrass Republicans by forcing a vote on language that would have forbidden the tax breaks from going to businesses including pornographers, prostitution, golf clubs that discriminate by race or sex, and companies that send U.S. jobs overseas. GOP lawmakers held together and defeated the proposal.


House Ways and Means Committee Chairman Dave Camp, R-Mich., called the Democratic effort "a political ploy" and added, "It's time to stand up for small business and the people they employ."
Democrats also tried unsuccessfully to replace the GOP tax cuts with breaks for companies that invest in their plants or equipment.


Cantor and others seemed sensitive to concerns by some rank-and-file GOP lawmakers that the bill muddled the message of a higher priority for Republicans and many Democrats: Revamping the entire tax code by lowering rates and erasing many tax breaks. They said that until that effort can start seriously — which many believe won't happen until at least next year — a quick tax reduction for businesses made sense.
Underscoring the political payoff they saw in the legislation, neither party waited long before unleashing email attacks on the others' votes.


The National Republican Congressional Committee, which helps guide House GOP campaigns, sent emails to dozens of districts represented by Democrats, accusing the local lawmaker of voting "for big-government instead of spurring small business job creation" along with the estimated number of small businesses in the state.


The Democratic Congressional Campaign Committee, House Democrats' campaign arm, emailed around 50 GOP-held districts accusing Republican legislators of voting for "more tax breaks for the 'rich and famous'" and asserting that millionaire celebrities like Kim Kardashian and Larry Flynt would qualify for the GOP reductions.


Obama has proposed a 10 percent tax credit — up to $500,000 — for firms that hire new workers or grant raises. Senate Democrats said they plan a May vote on their own plan, which will include a tax credit like Obama's and let businesses write off the costs of major purchases this year.


Democrats said the House GOP bill would do virtually nothing to spark the economy, citing an analysis by the Joint Committee on Taxation that said the bill's economic impact would be "so small as to be incalculable." They also complained that it was not paid for, meaning its $46 billion, one-year cost would make enormous budget deficits even bigger.


"They have run up deficits in this country recklessly, and in the name of a political campaign they're prepared to do it again," said Rep. Richard Neal, D-Mass.