The House has approved Republican-backed legislation to provide a tax cut of up to 20 percent for one year to companies with fewer than 500 employees.

Eric Cantor

The measure, approved by a margin of 253-173, passed Thursday mostly along party lines. While the bill is aimed at small businesses, Democratic lawmakers complained that most of the benefits would go to much larger companies. It is not expected to go far in the Democratic-controlled Senate.

Under the legislation, known as the Small Business Tax Cut Act, businesses with fewer than 500 employees would be eligible for a 20 percent deduction on their domestic business income, restricted to half of the amount of wages paid to employees.

“Tax policies should encourage economic growth, investment and job creation—not stifle it,” said House Majority Leader Eric Cantor, R-Va. “We need to stop and think about what kind of country we want to be, and do we want to be one with lower taxes, more growth and more jobs? Or do we want to be one of more government control and fewer opportunities?”

House Ways and Means Chairman Dave Camp, R-Mich., also expressed his support for the bill. “Small businesses are the engine of job creation,” he said. “And, while we pursue comprehensive tax reform that will give all businesses certainty to invest and hire, this bill will help small businesses to re-invest, hire new workers, or provide a raise to an employee.”

Democratic lawmakers argued that the tax cuts would not be targeted toward truly small businesses.

“This is not a small business bill,” said Rep. Sander Levin, D-Mich., ranking member of the Ways and Means Committee. “It’s small business in name only. It’s totally untargeted. It applies as long as an entity has under 500 employees. Those benefiting include law firms, sports teams, financial consultants, lobbyists, corporate farmers. And regardless of what their annual receipts are; they can be tens of millions or hundreds of millions of dollars. … This isn’t about mom and pop. It’s about popping the cork for wealthy taxpayers.”

Democratic lawmakers are backing an alternative that extends a tax break on equipment purchases for another year, but that measure was defeated by a vote of 236-175. Democrats also plan to schedule a vote on a bill combining the bonus depreciation extension with a tax break for new hires in the next few weeks, according to The Wall Street Journal. Earlier this week, another bill to institute the so-called “Buffett Rule” minimum tax of 30 percent on millionaires failed to overcome the 60-vote filibuster threshold (see Buffett Rule Blocked in Senate).