Acknowledging the fallacy of increased government spending, particularly during a time of recession, and the high costs of health care and college tuition, both of which affect the middle class more than others, Representative Eric Cantor (R-VA) on January 16, 2008 introduced H.R. 4995, the Middle Class Jobs Protection Act. The bill has five main components to grow the economy. First, it would slash the corporate tax rate from 35% to 25%, encouraging businesses to create jobs. Second, it would provide a 50% bonus depreciation for certain property acquired in 2008 and 2009. Third, it would allow businesses to claim expenses of $250,000 or less for purchases of $1 million or less over the next two years. Fourth, it would allow a five-year carryback for net operating losses, allowing companies with significant losses to trim their previous tax bills. Fifth, it would extend the carryback period for business tax credits for three years.
Business is often portrayed in the media as the root of all societal ills, but without businesses, large and small, American jobs would disappear. Congress must alleviate the tax burden for individual taxpayers so that people can pay their bills, save money wisely and perhaps put some back into the economy, but the tax burden on businesses must also be reduced because businesses create the jobs necessary for economic survival.
Cantor correctly noted that “job growth…is the key to addressing the slowdown in investment due to the housing crisis.” Tax rebates and a significant reduction in the corporate tax rate would go a long way toward ending the economic recession many fear is on the horizon. But these are temporary solutions, the sort of quick-fix mentality which is so common among our elected representatives who do not desire to confront persistent problems with long-term solutions. A simplified and reduced tax structure would alleviate many of our economic ills but a permanent overhaul of the tax code is perhaps too much to expect this year.