A big break for small businesses?

Richmond’s small businesses could be getting a little more spending money if Rep. Eric Cantor (R-Va.) can get his way.

Cantor, speaking to a small gathering at the Jefferson Hotel hosted by the Greater Richmond Chamber of Commerce, said he is going to unveil a bill next Wednesday that would give businesses with fewer than 500 employees a tax cut.

“It’s not the kind of total tax reform we need, but we need to do something quick to help small businesses invest in their companies and maybe hire new employees,” Cantor said.

Cantor’s bill would allow businesses to exclude 20 percent of their income from federal taxes.

Cantor also touted the House’s 390-23 passage of the Jobs Act, which has President Obama’s support and is waiting to be taken up by the Senate.

The Jobs Act allows small businesses to seek funding from a larger pool of smaller investors, who might not be “accredited” by the Securities and Exchange Commission. (Accredited investors have a net worth of more than $5 million.)

The act also allows businesses to advertise to attract investors, something that has been banned since 1982.

Critics of the act include SEC Chairman Mary Schapiro, who said it would open the door for shady businesses to lure in and defraud investors.

Cantor also told the crowd that not only was the individual tax rate too high but the corporate tax rate also needed to drop.

“We have, next to Japan, the highest marginal rate on corporate taxes,” he said “We’ve got to bring those rates down. I’d like to see them at 25 percent.”

Cantor, the event’s keynote speaker, addressed the crowd of about 30 business leaders as they polished off a luncheon of fillet mignon followed by red velvet cake.

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John Vellines

Sounds good, but most small businesses are S Corp or LLC. Would this tax break flow through to the owner’s personal tax return ?

Mike Ogilvie

John, I’m not a tax professional, but I’m pretty certain the answer is no. This kind of tax break is only for “small” businesses that are C Corps. Doesn’t meet my definition of small business and misses the mark completely.