GOP Proposes Big Tax Relief for U.S. Businesses
The proposal, offered by Sen. Rick Santorum, R-Pa., calls for tax breaks and regulatory relief combined with raising the minimum wage by $1.10 to $6.25 per hour over 18 months, according to Dow Jones Newswires, quoting Senate aides.
Santorum's plan counters a proposal by Sen. Edward Kennedy, D-Mass., who wants a $2.10 minimum wage increase over two years, boosting the minimum wage from $5.15 per hour to $7.25 per hour.
"We have not seen an increase in the minimum wage for eight years," Kennedy said on the Senate floor Thursday. "At the present time, the minimum wage has fallen to the second lowest level in the last 45 years."
Santorum countered that the increase is “too dramatic at this point.” He added that a 40 percent increase in the minimum wage would fuel fears of inflation. “"It would have strong negative repercussions in our economy, broadly," he said, Dow Jones Newswires reported.
Small businesses would benefit under Santorum's proposal, which would allow use of the cash accounting method for purchases and merchandise sales. It also calls for a two-year continuation of changes to so-called “section 179 expensing,” which allows bigger deductions for small business costs.
The 10-year Santorum plan would be partially paid for by raising taxes on companies that move their headquarters overseas to avoid U.S. taxes. Another way to offset the cost is to change the tax treatment of certain types of contingent convertible debt instruments, which is estimated to raise $945 million.
Santorum proposal would allow more flexible work hours, so workers could work more hours one week to take off hours the next. It also would double the current threshold under which small businesses are exempt from the Fair Labor Standards Act. Under the plan, small businesses with up to $1 million in receipts would be exempt. It provides additional small business regulatory relief.
The Senate will discuss both plans this week as amendments to a larger overhaul of bankruptcy laws.