Progressive groups, Van Hollen, urge Congress to scrap Cantor tax bill

Three liberal-leaning groups aligned with Democrats are urging Congress to scrap its proposal for small-business tax cuts and focus instead on closing tax loopholes for large corporations.

House GOP leaders have scheduled a vote next week on legislation to slash federal taxes for smaller companies — a bill the Republicans say will spur the economy and create jobs.

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But the three groups — the American Sustainable Business Council (ASBC), Business for Shared Prosperity (BSP) and Main Street Alliance (MSA) — argued Thursday that the revenue generated by eliminating corporate tax loopholes would be the better jobs plan. Maryland Rep. Chris Van Hollen, the senior Democrat on the House Budget Committee, joined them at the press conference.

"When big corporations use tax havens to avoid paying their fair share, they're starving the country of the resources we need to invest in our local economies and invest in our future," MSA's Bill Daley said at a press briefing outside the Capitol. "We're not here asking for some reduction in our taxes. We're asking for a better investment policy for our economy and for our communities."

Joseph Rotella, owner of Spencer Organ Co., a 10-employee shop based near Boston, echoed that message.

"Taxes are not just numbers on a spreadsheet. They provide revenues that pay for roads, bridges, public safety, public transportation, and other infrastructure [projects] and services that my business and customers count on," Rotella said. "There's nothing sensible about allowing big corporations big tax breaks while we cut the public services that are so important to a healthy economy and a harmonious society."

Thursday's press event coincided with the release of a new report from U.S. PIRG finding that America's small businesses would each have to pay more than $2,100 to fill the estimated $60 billion tax gap created each year by large corporations shifting assets and earnings overseas.

"What it means is everyone else picks up the tab," Van Hollen charged Thursday. "There's a huge cost to this, and the cost is to everybody else in the country."

Championed by House Majority Leader Eric Cantor (R-Va.), the GOP bill would grant a 20 percent tax cut to businesses with fewer than 500 employees. Speaking last week in his district, Cantor said the extra cash will empower small companies to hire more workers amid a economy where unemployment remains above 8 percent.

"We want small-business people to have more money go to their pockets, not the government's, and then they have more money to make decisions about hiring, about retaining jobs and about creating more jobs," Cantor told a group of high school students in Henrico County, according to the Richmond Times-Dispatch. "They have decisions that they can make, it just allows them more options."

The House is expected to vote on the proposal next week.

Some small-business leaders, however, maintain the tax break will do nothing to spur hiring if companies don't have customers buying their products. Scott Klinger, representing both the American Sustainable Business Council and Business for Shared Prosperity, said tax avoidance by large corporations, because it has led to layoffs in the public sector, is a much bigger threat to small businesses than current tax rates.

"When big multinational corporations don't pay their fair share, government budgets are cut, and vital services that mainstream businesses depend on are threatened," Klinger said. "When teachers, firefighters and infrastructure workers lose their jobs, we also lose our customers."

Van Hollen characterized the Cantor bill as a gift to hedge funds, lobbyists and large companies like Bechtel, rather than a boon for the small businesses that largely drive new job creation.

He went after Republicans for their "false claim" that the Cantor bill is designed "to help small businesses when in fact the aim is … to help a lot of hedge funds, to help a lot of Washington high-priced law firms and lobbyists and other companies that are doing fine."

"We want them to do fine," Van Hollen clarified, "but they don't need another tax break."

The thorny debate arrives in an election year when both parties are trying to make political hay out of reforming the nation's enormously complicated tax code. Republicans have long urged tax cuts across the board, arguing that hikes on even the wealthiest Americans will hobble the fragile recovery.

Democrats, meanwhile, are pushing the "Buffett Rule" — the notion that wealthy Americans should not pay a lower tax rate than those who earn much less. The rule is named after billionaire investor Warren Buffett, who has decried the fact that his secretary pays a higher tax rate than he does.

Democrats in the Senate are expected to bring a vote on the Buffet Rule as early as next week.

Rotella, the organ maker, said such a policy change would lead to a fairer tax system benefiting employers, employees and the country alike.

"If we level the playing field between big business and small business," he said, "we may find that jobs may actually increase — not only in number, but quality as well."