US Senate Rejects Republican Change To Minimum-Wage Bill January 31, 2007Posted by notapundit in Congress, Politics, US News.
WASHINGTON (Dow Jones)–The U.S. Senate Wednesday rejected a Republican proposal to enhance a small-business tax benefit that is part of a federal minimum wage increase bill.
The 49-48 vote on a procedural measure killed a proposal by Sen. Jon Kyl, R-Ariz. The vote removes what could have been a significant obstacle to the bill’s passage; a final Senate vote on the bill is expected Thursday.
The bill, which would raise the minimum wage to $7.25 per hour from $5.15 per hour, contains an $8.3 billion package of tax breaks. The benefits range from a tax credit for hiring welfare recipients to enhanced expense write-offs and are aimed at helping businesses offset the cost of the minimum-wage hike.
Kyl’s proposal would extend more generous expense write-offs for small businesses under “Section 179” of the tax code. The Senate Finance Committee’s tax package earlier this month approved a one-year extension of the benefit, which expires Dec. 31, 2009. Kyl’s plan would have extended it for two additional years, through Dec. 31, 2012, at a cost of $2 billion.
Kyl argued the additional expensing will benefit smaller businesses, which he contends don’t stand to benefit as much as big corporations from the tax breaks.
“What I am proposing doesn’t benefit the big corporations,” Kyl said. He said his amendment was backed by the National Federation of Independent Business, the Food Marketing Institute and other groups.
Senate Finance Chairman Max Baucus, D-Mont., the sponsor of the bill, led the Democrat’s opposition, saying the Kyl amendment would boost the federal budget deficit by $2 billion because it lacked provisions to offset the cost of the two-year extension.
The bill, sponsored by Baucus and Sen. Charles Grassley, R-Iowa, would extend for five years the “Work Opportunity Tax Credit” designed to offset the cost of hiring disadvantaged workers, such as disabled veterans. This tax break, first enacted during the Clinton administration, would reduce federal tax revenues by $3.6 billion over 10 years.
The bill also would allow retailers and restaurant owners to more quickly write off the costs of remodeling leased buildings.
To offset the cost of these provisions, Baucus’s plan contains several significant corporate-tax provisions aimed at halting tax abuses. One measure would limit certain deferred compensation practices, which companies use to spread out the timing of bonuses and other payments to executives.
By Rob Wells, Dow Jones Newswires