Saying that his tax reduction bill for small businesses supports a “pro-growth measure to jump start the economy,” House Majority Leader Eric Cantor told CNBC's Squawk Box Wednesday morning that he expects the legislation to pass in the House.
But the White House has already threatened to veto the effort, calling it an unproductive giveaway to many of the country's most profitable companies. On Monday, Senate Republicans swatted down a Democratic "Buffett rule" bill backed by President Barack Obamathat would impose a 30 percent tax on the incomes of the wealthiest Americans.
The House legislation sponsored by Cantor, R-Va., would provide a 20 percent tax deduction to most businesses with fewer than 500 employees. That would cover 99.9 percent of U.S. companies, according to Census Bureau data for 2007, the most recent year available.
“We know over the past three years there has been a 23 percent decline in small business start ups,” Cantor told Squawk Box. “We're trying to get job creation through small businesses back in the game.
“The president has continued to say he's for small businesses and the middle class but he's denying any help to small businesses who, frankly, could use a 20 percent tax cut as a step forward, as a pro-growth measure to try to jump start the economy,” Cantor told CNBC.
In response to a question about whether this back-and-forth on introducing bills is just so much politics, Cantor said: “I'm as frustrated as you are, and I think there will be some issues that have to be resolved through the election, and taxes is certainly one of them.
“If it is so important for the other side to raise taxes, then at least let's sit down and talk about how we fix the problem of the spending, because if you don't address the problem of the deficit and debt, raising taxes is like throwing good money after bad.”
Earlier in the week, Cantor told reporters that what is really needed is a wide-scale overhaul of the tax code that would lower tax rates. "We're not saying that this [legislation] is the panacea for everything. But since the other side will not join us in an honest tax reform discussion, we believe that right now it is urgent that we help our job creators."
The bill Cantor is proposing, he said, lays out a vision for the type of tax reform Republicans would like to see. “This small business tax cut is a step in the right direction. Overall tax reform means bringing rates down for everybody.”
In effect, Cantor's legislation would let companies reduce the bottom-line income on their tax returns by 20 percent before determining their tax liability. The tax break would last for one year at a cost to the Treasury of $46 billion.
In a statement, the White House said Obama's top advisers would urge him to veto the bill if it reached his desk.
The bill "is not focused on cutting taxes for small businesses, but instead would provide tax cuts to the most fortunate. Under the bill's definition of income, many of the `small businesses' that would receive the largest breaks are law partners, consultants and other wealthy individuals and corporations with the largest profits."
Nearly half, or 49 percent, of the tax breaks in the House measure would go to companies with income exceeding $1 million, according to an analysis by the nonpartisan Tax Policy Center, which analyzes tax legislation. Companies and people earning that much money account for just 503,000 of the roughly 165 million individual and corporate taxpayers in the country, or about one-third of one percent of them, according to statistics from the center.
Obama has proposed creating a 10 percent tax credit — an amount that would be subtracted from a firm's tax liability — for companies that increase their payrolls this year. That measure has an $18 billion price tag.
AP contributed to this report.