U.S. Republicans Take Aim at Regulations, Taxes

* Republicans seek to repeal 10 labor, environmental rules

* Small business would win new tax deduction

* Democrats accuse Republicans of playing politics

By Richard Cowan and Thomas Ferraro

WASHINGTON (Reuters) - Republicans in the U.S. House of Representatives want to create jobs by killing regulations on companies and passing tax breaks for small business and government contractors, Majority Leader Eric Cantor said Monday.

The initiative aims to reduce the stubbornly high 9.1 percent unemployment rate -- the top concern of voters ahead of next year's congressional and presidential elections.

Democrats have been increasingly criticizing Republicans for focusing on shrinking government spending, even at the expense of jobs, since taking control of the House eight months ago.

The House seems certain to muster the votes to strike down the 10 environmental and labor regulations targeted by Republicans, but the effort will likely be blunted in the Democratic-controlled Senate.

One of the Republican tax proposals would give small businesses a deduction equal to 20 percent of their incomes. Cantor said this would free up funds for those businesses to hire new workers and to invest in their firms.

Cantor did not provide details on lost revenues if his proposal, which was unveiled about a year ago, became law.

A "super committee", which is due to convene by Sept. 16, is expected to look broadly at U.S. tax policy and whether more revenues can be found to help shrink federal budget deficits.

The Republican leader also said he would seek House repeal of a 3 percent tax withholding plan due to begin in 2013. Aimed at discouraging tax cheating, the withholding is for government contractors with business in excess of $100 million.

Billions of dollars are being lost from contractors not complying with tax law, according to government estimates. But the new law will cause "potentially harmful cash flow disruptions for contractors and subcontractors across all sectors," Cantor said.

JOBS LIKELY TO DOMINATE DEBATE

The battle in Congress over how best to create jobs will likely dominate debate on Capitol Hill for the remainder of 2011 and next year.

"It is essential that the House continue to focus on the job crisis," Cantor wrote in a memo to fellow Republicans in preparation for the return of Congress next week from its summer recess. The memo was distributed widely to reporters.

"By pursuing a steady repeal of job-destroying regulations, we can help lift the cloud of uncertainty hanging over small and large employers alike, empowering them to hire more workers," Cantor added.

While backers of the regulations say the measures are vital to provide clean air and water, a nonhazardous workplace and safe consumer goods, Republicans complain that they cost jobs.

Senator Charles Schumer, a member of Democratic leadership, accused Republicans of playing politics and failing to do what is necessary to help the fragile U.S. economy.

"When they even stall common-sense measures like continuing the payroll tax cut for the middle class, it's clear Republicans are still putting politics ahead of our economic recovery," Schumer said in response to Cantor's memo.

"Their agenda seems intended only to provide cover for blocking the kind of pro-growth proposals needed to make a difference," Schumer said.

Cantor, instead of trying to repeal what he called the "top 10 job-destroying regulations" in one swoop, plans to stage weekly votes during the next few months on each of the rules -- giving Republicans the opportunity to keep the debate alive longer.

The regulations include ones by the National Labor Relations Board and the Environmental Protection Agency, favorite targets of Republicans and the business community.