Report: Democrats' Small Business Tax Cuts Would Create Nearly One Million Jobs
America's small businesses are powerful engines of job creation and economic growth. That is why Democrats have cut taxes on small business 18 times under President Obama, and are working to pass the Small Business Jobs and Tax Relief Act (S. 2237). A new, nonpartisan analysis has determined that S. 2237 would create nearly one million jobs.
Small Businesses are the Real Job Creators
In America, jobs come from our middle class and small businesses, not from tax breaks that allow millionaires to dodge paying their fair share or encourage companies to ship jobs overseas. Between 1993 and 2009, small businesses were responsible for creating nearly two thirds of net new jobs. The Senate is currently debating the Small Business Jobs and Tax Relief Act, a bill based on bipartisan ideas that would maximize the hiring potential of our nation's small businesses.
The Senate Democrats' small business tax cut proposal was first proposed by President Barack Obama last year. It would give a 10-percent tax credit to businesses that add payroll in 2012, either by hiring new workers or giving raises to existing employees. Companies would be eligible for the tax break on the first $5 million of new payroll, for a maximum credit of $500,000.
A second element of the proposal would allow businesses to write off 100 percent of the value of new capital investments they make in 2012. Current law only allows businesses to write off 50 percent of these costs.
A new economic analysis by Regional Economic Models, Inc. (REMI) estimates that S. 2237 would create nearly a million direct and indirect jobs, two-thirds of which would come from small businesses.
- S. 2237 includes a 10% tax credit on new payroll that will encourage businesses to hire more workers or give employees raises. The Congressional Budget Office has deemed this type of credit as having "the largest effects on output and employment per dollar..." of various ways to spur growth. REMI estimates that the payroll credit could create over 480,000 additional jobs.
- S. 2237 also extends "bonus depreciation," which allows businesses to immediately write off the cost of new investments, lowering business costs and boosting economic activity. The extension of "bonus depreciation" is a bipartisan idea that has broad business support. REMI estimates that extending "bonus depreciation" could create almost 500,000 additional jobs.
- REMI estimates that S. 2237 would create jobs across all states and in nearly every industry, with construction, manufacturing and retail experiencing the most growth. It is estimated that over 93,000 new jobs would be added to the construction industry and nearly 61,000 new jobs would be added in manufacturing.