Hey, Here's A Tax Cut That Actually Does Help Small Business

December 01, 2011 12:15 pm ET — Kate Conway

One of congressional Republicans' favorite arguments against asking people in the top tax brackets to contribute a little more is that it will 'punish small business,' the rationale being that many small businesses file their taxes as individuals. But the idea that any significant portion of small businesses would suffer doesn't hold water — 97 percent of the people in the top two income tax brackets don't report any business income whatsoever, and only two percent of the people who do report business income as individuals earn enough to fall into those top brackets.

As the end of the year approaches, there's a new tax cut fight looming, with the roles oddly reversed. Republicans, who fought tooth and nail against the expiration of the Bush-era tax cuts for top earners, are now dragging their heels on approving an extension of the payroll tax holiday. That's odd, since the payroll tax holiday means a lower tax bill for every single small business with employees. The Center on Budget and Policy Priorities' Chuck Marr explains:

The bill's payroll tax cut would not only boost workers' paychecks by hundreds of dollars or more in 2012 but also cut the taxes of every small business.  Employers would receive a tax holiday on fully half of their 2012 Social Security taxes on the first $5 million in payroll.  If employers create jobs, they would pay no Social Security taxes on the first $50 million in increased taxable payroll.

Adding an extra layer of irony is the fact the GOP is still using the 'it hurts small business' justification to oppose paying for the payroll tax cut with a millionaires' surtax. That's right — Republicans are resisting a policy that would help every single small business employer in order to save a tiny portion of the wealthiest people from a surtax.

From the beginning, it's been clear that using "small business" as a buzzword was really a Republican tactic to preserve tax cuts for the rich, and the fight over the payroll tax only highlights that in a particularly illustrative way.

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