Kyl Obstructs Small Business Tax Cuts In Order To Protect Small Businesses From Imaginary Tax Increase

Today, President Obama pressed Congress to approve a pending bill that provides tax credits to small businesses and sets up a lending fund to get credit to businesses that are having trouble finding loans. “We must continue our efforts to do everything in our power to spur growth and hiring. And I hope the Senate acts this week on a package of tax cuts and expanded lending for small businesses,” he said.

One of the reasons that the bill Obama referenced hasn’t made its way through the Senate is that Sen. Jon Kyl (R-AZ) has been threatening to bog it down with his proposed cut in the estate tax, which would send $91 billion in tax cuts to the richest of the rich. But Kyl is claiming that his obstruction of the small business bill is actually an attempt to protect small businesses from tax rates that he says are “going to skyrocket”:

If the Small Business Lending bill is intended to help small business create jobs, wouldn’t it make sense to provide small business owners with the certainty that their tax rates aren’t going to skyrocket at the beginning of next year?

It definitely does make sense to ensure that tax rates don’t “skyrocket” on small businesses, and Kyl is presumably worried that allowing the estate tax to reset to its 2001 level, as current law stipulates, will do just that. But even if we grant Kyl’s premise, all that’s needed to avoid that outcome is for the Senate to approve a bill to approve a bill which has already passed the House that will permanently set the estate tax at the 2009 level. However, it was Kyl himself who blocked that plan, in his zeal to cut taxes for the super rich.


In fact, just like Kyl’s position on the Bush tax cuts proves that he doesn’t really care about deficits, his position on the estate tax proves that he doesn’t really care about small businesses. After all, at the 2009 level, just 0.25 percent of estates will have any estate tax liability at all. And just 1.3 percent of that 0.25 percent will be composed of estates with significant small business assets.

The Tax Policy Center estimates that at the 2009 level, just 110 small businesses in the entire country will owe any estate tax in 2011. Of these, all but a handful will have sufficient assets to pay the tax, and the exceedingly few that don’t “have other options — such as spreading their payments over a 14-year period — that would allow them to pay the tax without selling off any” assets.

In all, less than one quarter of one percent of the total cost of Kyl’s tax cut would actually end up in the hands of small businesses; the rest would simply go to further enriching the rich. So either Kyl has no idea what the practical implications of his stated policy preference are, or he’s using small businesses as a convenient prop to knowingly push through tax cuts for the rich. Either way, his professed concern over an imaginary tax hike on small businesses is getting in the way of small businesses receiving actual relief.