Tax Breaks for Job Creators

Center for Budget and Policy Priorities (CBPP) got itself into a lather the other day noting that the new, 20-percent deduction for pass-through businesses will reduce revenues by twice what the federal government spends on Pell Grants.

What’s the link between the Pell Grant program and the business income deduction? None. There is no link. The CBPP could have just as easily compared the deduction to spending on our national defense or agriculture programs.

Moreover, while the CBPP makes certain to highlight the 7.7 million beneficiaries of the Pell Grant program, they ignore the 73 million employees who work for pass-through businesses. Those workers earn around $2 trillion a year in wages. To borrow the CBPP’s simple-minded premise, that’s bigger! Nine-times more employment and seventy-times more monetary benefit. And unlike a Pell Grant, those pass-through jobs continue from one year to the next, providing a safety-net of economic security for tens of millions of families across the country. But no matter. For the CBPP, government spending is always more important than private sector jobs.

Also missing from their post is any notion of the actual taxes pass-through owners pay. The CBPP laments that the “pass-through tax break is extremely regressive: a full 61 percent of its benefits are expected to go to the top 1 percent of households by 2024” but fails to note that those households will continue to pay enormous amounts of tax – more than $500,000 a year.

That’s typical of left-of-center tax analysis. The opponents of tax relief never focus on tax burdens, just tax benefits. To the left, everybody is a beneficiary.

So, the CBPP is upset that taxpayers employing the majority of private sector workers and paying high levels of tax get a reduction in a bill designed to, wait for it, cut taxes and promote jobs. Go figure.

This is an age-old battle – the CBPP will always want higher tax burdens on job creators to fund more government spending. That’s who they are. But we reject the idea that the United States is merely a country of beneficiaries. It’s a country of entrepreneurs and risk takers and workers and creators – the types of people that start businesses and make investments and create jobs. That’s the population targeted by the pass-through deduction in the Tax Cuts and Jobs Act.

These businesses are the very backbone of the American economy and to keep them and their workers dynamic and growing, we need a federal tax code that maintains parity between big public corporations and Main Street businesses. That’s why the pass-through deduction was included in the Tax Cuts and Jobs Act, and that’s why the Main Street business community is committed to making the deduction work for all employers, including making it permanent.

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