Small Business Tax Breaks Included In Minimum Wage Bill
Both House and Senate measures extend the Work Opportunity Tax Credit for employers who hire welfare recipients and other disadvantaged persons and include new rules for business expenses. Unlike the Senate bill, however, the House measure gives restaurant owners who might be hurt by the minimum wage hike, a break on how they calculate deductions for Social Security taxes paid on tips, the Associated Press reported.
The two bills also differ in how they would raise revenue to pay for the tax credits. The House bill proposes closing a loophole that permits taxpayers to shift income to children who would pay tax on capital gains and dividends at a lower rate. The Senate bill puts some restrictions on deferred compensation for executives and eliminates deductions for payments in lawsuits. The Senate bill also extends a $100,000 write-off for equipment spending for one year.
Senate Finance Committee Chairman Max Baucus (D- Mont.) said that House and Senate negotiators could negotiate a final bill in two or three weeks. “The minimum wage provision is going to trump all of this and is going to drive us to get this thing done pretty quickly,” he said according to the AP.
Calling the House package “puny,” Senator Charles Grassley (R. Iowa) said he was wanted a “win, win, win” provision that raised wages, helped small business and generated tax revenue, PalmBeachPost.com reports.
The U.S. Chamber of Commerce supports the House version of the minimum wage bill because it objects to the elimination of tax deductions on some forms of executive compensation and on the cost of settling lawsuits in the Senate version, the New York Times reported. Small business groups support the Senate version.