"It would only be on the margin," Zandi said. "It's much more preferable to make the tax code simpler as opposed to more complex and use the additional revenue to lower marginal rates for all businesses."
An aide to Senate Democrats said a new proposed deduction will face trouble in their caucus because party members view it as too broad. Senate Democrats are interested in exploring other ways to reduce taxes for small businesses, according to the aide, who spoke on the condition of anonymity.
Working Together
"I'm hopeful we can get some bipartisan agreement" on the deduction, Cantor said on Fox. "A lot of these issues can be played out in the election, but there is a window of opportunity for us to work together right now."
More than 5.7 million companies in the U.S. operated with fewer than 500 employees in 2009, according to the SBA. Those companies were concentrated in the construction, retail, health care and technical services industries, according to the agency.
Representatives for small businesses that would benefit from the deduction aren't rallying behind Cantor's proposal. Molly Brogan, a spokeswoman for the National Small Business Association, a Washington-based trade group, said such companies would appreciate the tax break. Still, she said, it won't solve the challenges they face, which include the complexity of the tax system.
"What needs to happen is a complete scrapping of the tax code and broad reform," Brogan said. "I don't think this deduction can be seen as fixing the problem."
Jennifer Cooper, a spokeswoman for the National Federation of Independent Business, a small business group in Washington, declined to comment on the proposal.