Small Business Tax Breaks Included In Minimum Wage Bill

The U.S. House of Representatives agreed on Friday to attach $1.3 billion in tax breaks for small businesses to legislation that would raise the federal minimum wage from $5.15 to $7.25 an hour over two years. As originally drafted, the bill did not contain any tax proposals, but it became stalled in the Senate where Republicans want to attach an $8.3 billion package of business tax breaks and revenue increases to the legislation.

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.

You may like these other stories...

Individuals interested in reviewing the proposed 2015 US Generally Accepted Accounting Principles (GAAP) taxonomy from the Financial Accounting Standards Board (FASB) have until October 31 to submit their written comments....
Ernst & Young 2013 audit deficiency rate 49%, regulators sayMichael Rapoport of the Wall Street Journal reported on Thursday that the Public Company Accounting Oversight Board (PCAOB) found deficiencies in 28 of the...
PwC must face $1 billion lawsuit over MF Global adviceA federal judge on Wednesday ordered PricewaterhouseCoopers (PwC) to face a $1 billion lawsuit claiming that its bad accounting advice was a substantial cause of the...

Already a member? log in here.

Upcoming CPE Webinars

Sep 9
In this session we'll discuss the types of technologies and their uses in a small accounting firm office.
Sep 10
Transfer your knowledge and experience to prepare your team for the challenges and opportunities of an accounting career.
Sep 11
This webcast will include discussions of commonly-applicable Clarified Auditing Standards for audits of non-public, non-governmental entities.
Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.