If America is to preserve and create millions more meaningful jobs, let's focus on helping the job creators, not hurting them.
And who generates most of the jobs in this country?
Small businesses - defined as entities with fewer than 500 employees - provide 70 percent of our nation's jobs and are the heartbeat of innovation and productivity in America. They also happen to be struggling to stay afloat amidst the evaporation of consumer spending, credit and access to private capital. Unless small businesses rebound and restore their vitality, it's almost impossible to envision our economy making a full recovery.
As Washington moves to raise taxes on small businesses, it wouldn't be enough for conservatives and all other concerned Americans merely to oppose this course of action. Now is the time for us to come together to present ideas and solutions to make America more conducive to small-business growth.
That's why the House GOP has made revitalizing small businesses the cornerstone of our alternative plans for economic recovery. During the stimulus debate, Republican leadership personally handed President Obama our solutions, which would have created twice the jobs at half the cost of the bill the president eventually signed. We proposed an initiative to allow small businesses to exclude 20 percent of their overall income from taxes. It was an unambiguous statement that it is only small business and private industry - motivated to grow, invest and innovate - that are positioned to create the millions of jobs our country needs.
Small businesses would also get a boost under the alternative budget House Republicans rolled out last week. Our budget responsibly winds down the deficit and offers more opportunity for job creators by laying the groundwork for entrepreneurialism, economic growth and investment. Most small businesses pay taxes on income as individuals.
Our budget would give these entities a tremendous boost by simplifying the tax code and lowering the highest marginal tax rate down to 25 percent. Meanwhile, the small businesses that pay taxes at the corporate level would benefit from our proposed cut in the corporate tax rate - now the second-highest in the developed world after Japan - down to 25 percent.
To be fair, the Obama administration deserves credit for announcing a plan last month to back $15 billion in Small Business Administration loans. But the plan is insufficient, since 90 percent of small businesses have never even applied for an SBA loan. Moreover, the benefits small businesses will reap from the initiative pale before the damage inflicted as a result of the administration's tax policies.
The best medicine for small business is confidence. Unfortunately, those in control of the agenda prescribe anti-competitive union card-check legislation and a budget that raises taxes on the employers of 25 percent of American jobs. In fact, small businesses make up more than 50 percent of the so-called “individuals” to get hit by a $1 trillion tidal wave of tax increases over the next decade.
Said Oklahoma City small-business owner Terry Neese, who testified before a House GOP hearing on small business last month: “If this small-business tax becomes reality, many small-business owners tell me that they will not be able to grow their business. Not only will they not be able to hire more people, in many instances they will be forced to lay off workers. They won't be able to buy new equipment; they won't be able to invest in their communities.”
The GOP has the obligation to be the honest opposition. When we believe the president is correct - for example, in his handling of Iraq policy - we will stand with him. But when he and congressional Democrats put forward an agenda we fear will deal a blow to American prosperity, we will speak out and offer the country a better vision for the future.
We believe that small businesses, entrepreneurs and the self-employed are the solution to our ills, not a source of finance for a vast expansion of government programs. That's why we propose alternatives that reward hard work and encourage investment, ingenuity and the creation of wealth rather than the redistribution of it - the small-business values that made America special.
Rep. Eric Cantor, who represents Virginia's 7th Congressional District, serves on the House Ways and Means Committee.
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