As we go to press, it is possible the U.S. House of
Representatives and Senate will have reconciled differences between
their respective tax proposals that include increases in the
federal minimum wage, and the Fair Minimum Wage Act of 2007, HR 2,
could be on its way to the president's desk. But the manner in
which the minimum wage hike was turned into a tax bill provides an
instructive pattern for NRCA members that could be repeated
during the 110th Congress.
During the first 100 legislative hours of the 110th Congress,
Speaker of the House Nancy Pelosi (D-Calif.) pledged "to pass key
measures affecting the everyday lives of all Americans." A major
component of this agenda was raising the minimum wage, and on Jan.
10, the House passed HR 2 to raise the minimum wage from $5.15 to
$7.25 per hour during a two-year period. The House passed the
measure as a stand-alone bill with no benefits for small
businesses, and Pelosi and her allies demanded the Senate also pass
HR 2 with no amendments attached.
But the Senate, with 51 Democrats and 49 Republicans, cannot
pass legislation strictly along party lines because 60 votes are
needed to invoke cloture and end unlimited debate. Republicans have
the votes to prevent cloture and insisted HR 2 be paired with tax
breaks aimed at helping small businesses. This led the Senate to
craft a tax package that could obtain enough votes and be added to
On Feb. 1, the Senate passed HR 2 by a vote of 94-3, agreeing to
include an $8.3 billion package of tax incentives. The bill would
extend the Work Opportunity Tax Credit for five years for employers
who hire from eight categories of workers listed by the U.S.
Department of Labor; raise to $10 million the gross receipts
threshold for businesses to qualify to use the cash method of
accounting; extend through 2010 the Section 179 expensing provision
that allows small businesses to deduct as much as $112,000 annually
from income in new capital investments; broaden the pool of
companies that can organize as Subchapter S corporations; and
extend shorter tax depreciation schedules for restaurant and
leasehold improvements to a wider audience...
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