By Peter Schroeder - 04/17/12 07:51 PM EDT
The White House has threatened to veto a small business tax cut bill being pushed by House Majority Leader Eric Cantor (R-Va.), calling it a $46 billion "giveaway" to the "most fortunate."
In a lengthy policy statement, the White House blasted the 20 percent cut to companies with less than 500 employees as a salve to high-priced lawyers, consultants and "other wealthy individuals and corporations with the biggest profits."
"This bill is not an effective way to incentivize small business investment and job creation," the administration said. "If the President is presented with H.R. 9, his senior advisors would recommend that he veto the bill."
The House is expected to take up Cantor's bill on Thursday, with the GOP majority set to send it to the Senate. Cantor touted the bill before the veto threat, arguing it was the right prescription to create jobs and get the economy moving, citing another report that found it could create 100,000 jobs.
"We believe you ought to reduce taxes on small businesses to create jobs," he said. "If we are going to get people back to work, we have got to help the job engine that produces those jobs, which is small businesses.”
But the White House contended that the one-year cut could actually stifle hiring, saying small businesses that have invested or hired more might get a smaller cut than those who did not, encouraging firms to avoid hiring for the year to maximize the benefit. The White House also contended the cut could be a tool for abuse, as companies might "hire" family members for a deduction, or try to re-characterize existing activities to qualify for it.
The veto threat comes one day after Democrats failed to advance their own competing tax proposal in the Senate. There, lawmakers blocked the "Buffett Rule" down a largely partisan 51-45 vote. That measure would have required those making more than $1 million a year to pay a higher effective tax rate than middle-class families.
Republicans blasted the bill as a tax increase and a political gimmick.