As the U.S. House begins debate on H.R. 9, the Small Business Tax Cut Act, the objective of the legislation needs to be assessed by those the bill seeks to help.  As currently written, H.R. 9 is unlikely to promote job creation by the nation’s small businesses. 

Real small business owners don’t make hiring decisions based on personal income or tax rate.  Hiring decisions are based on demand for goods and services.  If the demand is not justifying the addition of more employees, a marginal increase of income to the owner will not result in the hiring of workers. 

It has been reported that the Joint Committee on Taxation has projected about $6500 as the tax break for the average small business qualifying under this bill.  Because this is only a small amount of the actual cost to a business for adding an employee and because this is only a one-time tax break, small business owners will use this small “windfall” for things other than job creation.  Even the wealthiest of small business owners with incomes over $1 million whose average tax break will be about $60,000 will be unlikely to put their “windfall” towards a new employee.

An effective job creation plan from Congress would be investing in Main Street through funding for infrastructure projects and workforce development that will strengthen our economy for the long-term.  The creation of jobs through these efforts will in turn generate demand for our small businesses leading to natural growth in hiring.